A New Economy Is Emerging – Are You Ready? With $36 trillion in U.S. debt, failing institutions, and historic economic and technological shifts, we are heading into a period of massive disruption. Brett Rentmeester breaks down why the old financial system is unsustainable and what’s next for investors.
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I’d to welcome back Brett Rentmeester to Wealthion. Brett is a founder and managing director of Winrock Wealth Management, who is also one of our RIA partners. Happy New Year, Brett, because I haven’t seen you. I don’t like to do it this late in the January, but welcome back.
Brett Rentmeester (00:29.272)
Thank you, great to be back, Andrew.
Andrew (00:31.526)
So, Brett, let’s get right into it. And as we look ahead to 2025, how do we assess the big picture of where we’re headed economically?
Brett Rentmeester (00:43.854)
Yeah, let me start by saying my colleague Chris Casey was on and he gave an outlook for 2025 surprises, expectations. Let me do the opposite. Let me zoom out for a moment and maybe put into context where we think we are in this developing story. First, let me mention that Windrock was kind of founded on a core belief that we weren’t in a normal investment market and we couldn’t just look backward and expect.
historical stock and bond performance going forward. And part of that reason is because of the debt situation that now everybody’s aware of and the fact that we’ve printed money and kind of had, I think, reckless policy that’s put us in somewhat of a precarious position that’s been running for a number of years. This really dates back to the tech bubble. But with that said, I think I’m at least reminded of combining that insight with some work by Neil Howe.
and his book, The Fourth Turning, which basically in a nutshell is that there are generational cycles and about every four generations or every 80 to a hundred years, we have a crisis moment that we have to get through in a kind of a rebirth. And by his math, I think we’re in this decade right now to expect some big change. And, you you think the past cycles went back to World War II and the depression. Prior to that, it was a civil war. Prior to that, was
independence. So we sit here today and one of the insights of the book is that people lose faith in institutions and the institutions of old don’t really fit the needs anymore. And I think if we just do a report card today, I think we have failing institutions. We’re sitting here with 36 trillion of official debt, but by some measures over 200 trillion of unfunded liabilities when you add it all up, the off balance sheet stuff.
We’ve got social programs that can no longer support themselves. That includes Social Security, Medicare. You know, we’ve seen, we’ve known for two generations with demographic changes, those won’t support themselves. And then, you know, we’ve got the near-term predicament of, yes, you bring in 5 trillion of tax revenue, but you’ve got 5 trillion accounted for just from Medicare, Medicaid, Social Security, defense, and now over a trillion dollars of interest on debt. So these are all, it just reeks of unsustainability.
Brett Rentmeester (03:08.012)
And the question is, how are we going to fix it? And, you know, there’s some measures being put forth, but I think maybe on a, the note of where we had, I think we’re going to see a disruptive future. think we’re going to see decentralization challenge the idea of centralized companies and governments. think, you know, the close eye on robotics and the future of their. Also, I think AI is just getting going. I think most people don’t understand it yet. Most people use it as like an enhanced search engine.
And then I think we’re going to see a complete revamping of the systems that are just expensive that people can’t access like medical, universities, et cetera. So I know that’s a long list, but that’s kind of the big picture.
Andrew (03:49.914)
There is a lot to unpack there, but I want to I want to sort of ask you since you talked about Winrock and Winrock is one of Wealthion’s investment advisor partners. You said you were found, you guys founded, you and Chris found Winrock on a different premise because you didn’t like the way things are going. So what is the premise that Winrock goes on and your investment philosophy? I know we’ve touched on that, but I want to I want to go back there and touch on it again.
Brett Rentmeester (04:20.174)
Sure. think part of it, there’s kind of two components, a top down and a bottom up. The top down is we believe you have to assess the big picture backdrop of where we’re headed, kind of what like I described, as opposed to most advisors, not everybody, but most kind of have a playbook of what’s worked over the last 50 years. And if you ask them, how’s the stock market going to do with the bond market? They fall back on history. But I think we’re in a different period because of the debt, because of the money printing, it creates different
different things to think about, different opportunities, but also different risks. So I think you have to have that big picture framework of what those factors might mean. And then there’s a bottom up element. And I would say we’re much more entrepreneurial than many advisors. You know, we’ve been doing cryptocurrencies for over a decade. We were really early movers in the build to rent real estate phenomena in a number of other things that require kind of an entrepreneurial mindset. And so I think the combination of those two
you know, are what we hope will help us navigate successfully in these changing times ahead.
Andrew (05:25.638)
You mentioned Neil Howe and his fourth turning and how every four generations there’s, I don’t want to say a disaster, but a crisis. And you mentioned a crisis. Obviously the country’s debt is a crisis. Servicing that debt can become a crisis, isn’t a crisis just yet, but there is $8 trillion in debt that’s turning over that we’re going to have to, or the US is going to have to, I can’t finance that, but the US is going to have to finance that. And you look at that, what,
is the crisis as you see it.
Brett Rentmeester (05:59.244)
Well, broadly put, I think it’s what I mentioned, the insight from the fourth turning. At most of these periods in time, the crisis is that people lose faith and confidence in the systems that had gotten them there, that had worked in the past. So, 50 years ago, social security was a great idea. You’d have a lot more people supporting everyone retiree, or maybe the CDC was a great idea, or universities were a great idea. But when you hit a point like we’re at,
I think they’re failing on almost every level as far as sustainability. We haven’t been on a sustainable path for a long time. so that shows up, the symptom of that is all the debt and all the money printing to kind of perpetuate a system forward that’s not sustainable on its own. So the only real question is where are we at? Are we near the end of that? Or is a crisis imminent? Or are we gonna come up with some solutions to it? And we’ll see.
Andrew (06:55.462)
It’s interesting because, let’s peel back the curtain. We don’t just sit here and talk. We talk beforehand. We send each other notes. you know, in your notes, you explained to me that we have $5 trillion in tax revenue from this country, all the taxes that the country collects. That’s all spoken for, whether it be social security or defense, Medicare, you know, other things. It’s all spoken for. So now…
All the social programs that are going to be taken a look at, let’s not kid ourselves, President Trump is going to look at all these things. How do we finance that going forward? And how do we change it? Is it possible to change it? Because people look, you know, the older people who are relying on social security, you and me, we’ve been paying into the system for 30 plus years. We won’t put an exact date on it, but it’s 30 plus years.
It may completely change.
Brett Rentmeester (07:55.712)
Yeah. Well, I mean, and it’s back to sustainability. We haven’t been on a sustainable path. You put money into social security, but it’s not sitting in a social security fund for you. It’s being spent on God knows what, but certainly not sitting on the side for you, Andrew. So what they’re reliant on is taxing people in the future to then pay you off. So that is the system. And I’ll point out, this is really a global phenomenon. It’s not just the US. Europe’s heavily in debt with similar issues.
So is Japan, actually. So is China. So I think we’re at a moment where the world’s waking up to the unsustainable nature of this and it’s more mainstream. And I do think there’s some paths ahead. think, you know, if we think about the Trump presidency, Trump 2.0, there’s kind of two paths that might, one path might take us out of this, the other might not. And we sized it up as two paths that we might need the first hundred days to properly assess.
But so far so good in the sense that what Trump has said he’s going to do, he’s acting on. know, people can agree or disagree with different policies, but so far what he’s stated matches actions. One of the paths, I’ll call it the massive change path, is totally rethinking how do you get out of this predicament. And you have to deal with existing debt, but you’ve got to find a way to kind of rejuvenate the economy and either grow your way out or figure out how to live sustainably going forward.
And I think a lot of the measures that are going to be put in place from being energy independent to trying to have the US truly be the home to AI, robotics, cryptocurrencies, and putting in policies and incentives to bring the whole world’s talent here to do that, I think are really important. There’s another path though, and we’ve internally called it the red tape path. Irrespective of the intentions,
This is not just about a president. It’s you you need the Senate, you need Congress behind you. There’s all sorts of complexities and you know, there is a chance we have this kind of redo of the first term where the intentions might be one thing, but Trump’s kind of red taped to a chair and you get incremental change, but nothing to bend the cost curve. And on top of that, you brought up earlier, I mean, there are some real negatives that this administration has to deal with. And they start with what you mentioned,
Brett Rentmeester (10:24.76)
debt rollovers. Janet Yellen declared extraordinary measures coming into place with liquidity starting January 21st, the day after the inauguration. So immediately you have this issue and you’ve got upwards of eight or more trillion dollars of debt that have to be refinanced. So none of these things are going to solve, none of these measures being proposed are going to solve these problems right away. You also have, let’s not forget, on paper,
We think one of the most overvalued stock markets ever in history, at least when looked at by historical long-term valuation measures like the Shiller PE ratio, where we’re right up there surpassing where we were in 08 and 1929, and it kind of nosebleed levels. Now, valuation isn’t a great trigger for timing, so it doesn’t mean a crash is imminent. It just means we’re in the zone of harder to get good long-term returns just buying the market.
And a couple other things. mean, interest rates have come down on the short end, but they’re rising on the long end. That’s a net negative. However, they’ve been range bound. So for now, you know, they’re kind of in a controlled range. then finally, Andrew, you brought this up, but this has been a big trigger we’ve relied on historically for trouble. And that is when you get an inverted yield curve, that is you get weird behavior where short rates are all of a sudden longer or higher than long-term rates, which really shouldn’t happen.
We had that. Historically, since 1965, every recession and kind of big period like that has had an inverted yield curve first. The only exception was 1966. So we had this last year. It’s kind of renormalized, but it is a warning. But for now, the warning isn’t combined with other things we’d expect to see, credit spreads moving out. So credit spreads are just a measure of
Andrew (11:50.39)
and historically since 19…
Brett Rentmeester (12:16.844)
a lower quality company borrowing money, how much more do they have to pay in an interest rate than a treasury bond? And historically, if there’s gonna be trouble, those rates start going up and people are a little more discriminating on how much they’re gonna charge a lower quality company. But right now, what do we observe? We basically observe near record credit spreads. So these are things to watch. We’ve got some omens hanging out there, but the short-term data is suggesting these things are contained.
Andrew (12:44.192)
So you talked about, we talked about the yield curve and it’s actually right now it’s about flat and it has flattened out. It did invert. The long bonds were higher. The shorter bonds had come down a little bit, but now that it’s creeped back in the other direction and it’s relatively flat. Now with $8 trillion in debt that we have to kind of roll over,
Obviously Janet Yellen isn’t going to be there to do that. And we have Scott Bessent now who has to take care of all of this. How do you think that he deals with it? And I know that Janet Yellen got into a situation where she was relying on the short term, the short term. So we would have to roll this over quicker. But with longer bonds being what they are, does it make any sense to say, OK, you know, we’re going to pay more, but
We’re going to have longer to deal with this and we can kind of roll them out as the shorter bonds come down.
Brett Rentmeester (13:49.248)
Yeah, I think so. mean, I’d say we’ve been on an irresponsible path that again goes back, you know, more than just a couple of years. And that was go back to COVID. There was a point we could have lost. Some countries did this, issued 7,500 year bonds at very low rates. They took that opportunity. They saw the wisdom and rates aren’t going to stay here forever. Let’s take advantage of it. We’ve done the opposite. We’ve kind of played this, well, we can get it a little cheaper if we keep it short term and keep rolling it, but now rates have crept up. So.
Yeah, I don’t know. Yeah, I think it’s a dangerous game right now. But again, it’s not just the US. You’ve got Europe, Japan, China, everybody in a similar boat. And at some point, you might need a different system to get through the debt issue. And I think that’s why there’s all this rumbling about, you know, Bitcoin Reserve, other things on balance sheets. Are there nonconventional ways to get us out of this debt problem?
Andrew (14:50.338)
Is there a play for crypto in helping us out of this problem?
Brett Rentmeester (14:56.302)
I think so. mean, I think first of all, just from an economic standpoint, crypto is a broad term. Everybody thinks of Bitcoin when you say it, but if we go a step further, we’re talking about blockchain technology. What’s the genius in blockchain? It’s a trustless system. It’s a computer program where you don’t have to trust the person on the other side, right? That’s why we needed banks and all these centralized institutions in the past, because we couldn’t trust each other. We needed someone to sit in the middle.
and take a toll, take money, but they could ensure if I’m buying your house that I get the house title and you get my payment, Andrew. But now we’ve got Bitcoin and other things that take away the need for these centralized institutions. And if you take it a step further, Bitcoin is just one application on blockchain. Now we’ve got all these other decentralized projects of people developing applications and things that have business.
you know, businesses around them that don’t have centralized institutions. So I think we’re just beginning. I think the next decade or so belong, the future really belongs to decentralization. I think that might be the fourth turning that the big institutions in the past, the idea of you need this big bank to transact and move money, or you need one company to control social media, even though social media is really us, the users corresponding, putting our pictures up there.
It should be decentralized. So I think it’s going to be a powerful engine of growth. And some people have talked about it as a creator economy because now all of a sudden it allows people to use open source code and create their own applications for their areas of knowledge and expertise. As far as governments go, you know, I think there’s a question of could they put a reserve out there of, let’s just say Bitcoin, maybe issue Bitcoin backed bonds.
had a 0 % interest rate and give some upside to investors who want a government guaranteed bond but want to participate in some of the upside and let that be part of the way out of solution, I think it might be. And I think there’s very little risk in doing some of this or trying it. Now, Bitcoin may or may not be the sole solution, but the idea of actually having reserves and assets of some tangible limited
Brett Rentmeester (17:15.756)
value, mean, limited scarcity that aren’t abundant, I think makes a lot of sense. And you’re starting to see a lot of governments at least talk about it. So we’re going to set the, I think we’re going to set the pace for it. And I hope, I hope that is the path they pursue.
Andrew (17:32.513)
Talking about a disruptive future in cryptocurrency, is there a way to lend? Like, look, you know what? I don’t have four or $500,000 to go out and buy a house, but maybe I have a down payment. How does cryptocurrency deregulated come into play where, okay, you know what? I’m gonna borrow X amount for this interest rate. Since it’s not really regulated, who decides what interest rate you’re gonna pay to borrow that?
money or currency.
Brett Rentmeester (18:02.284)
Yeah. Well, the beauty, the beauty, Andrew, is the market decides. It’s a free market experiment. It’s decentralization is inherently free market. So, you know, why do we really need, I mean, this gets kind of philosophical, but do we really need a small group of people, the Fed acting like they’re setting prices of interest rates when they only can maybe control the short end with their actions? Or do we let the market decide? Just like, is it better to have a grocery store charge
price that makes sense or have the old Russian system of we set prices based on what we think. I think we’re very close to that moment where regulations are being rolled back that will allow traditionally, even traditional financing companies to lend against people’s Bitcoin. And I think the market will dictate what those rates look like. But that might be part of the future where you have Bitcoin, you don’t want to sell it, but you want to borrow something against it. And it’s viewed as
solid collateral that people will lend against where, you know, historically it hasn’t.
Andrew (19:06.374)
What does the dollar, Brett, play into this? Because, you know, the world trading is done with the dollar in mind. And how does that come into play? If we adopt cryptocurrency, whatever it is, how does the dollar come into play? And I guess now it’s a free market, right? If I go to China and say, okay, I want to buy X amount of steel or concrete, I just do it directly now and there’s no, there’s no…
Nobody has to worry about is what I whatever price I said is what they’re paying or whatever price they said is what I’m paying
Brett Rentmeester (19:43.438)
Well, let me just step back on this question. A couple of years ago, governments viewed Bitcoin as a threat to their fiat issued currencies, right? Because you could come up to a world where, hey, it’s the people’s money, why do we need the dollar or the yen or the euro, right? So that was a real threat in countries like China tried to clamp down on it. But I think what they’ve figured out, at least the smart ones is much like the internet.
You can’t stop, you couldn’t stop it. If you tried to stop the internet, maybe North Korea stopped it and they fell way behind, right? But everybody else was kind of forced to, you’re either gonna own the technology and benefit from it and be part of it, or you’re gonna be left way behind. And so I think governments now are acknowledging this phenomena can’t be put back in a bottle. If you cancel in the US, it’ll thrive in other countries and vice versa.
So maybe there’s a way to take the power of it and try to get out of our problem and try to enhance maybe the value of the dollar by having valuable reserves behind it, Bitcoin, gold, other things. And as far as how people transact in the future, I don’t know for certain, Andrew. We’re still at this part of the experiment where currencies are the risk ahead because governments are bankrupt on paper.
and they’ve only gotten by by printing money out of thin air to kind of kick the can. And so far they’ve been able to do it. I mean, to their credit, I didn’t think it could go on this far, but here we are. But at some point, even a of a kindergartner, if you show them the math could be like, well, this can’t go on forever. Like when does it end? So we’re not there yet, but I think step one is going to be putting it on reserves. Now, again, the free market will set prices on what countries pay for goods, what individuals pay for goods. And it might be
still transacted in dollars, but maybe it’s transacted partially in Bitcoin or maybe Bitcoin’s used for big multinational payments, but the dollar or other cryptos are used for smaller transactions. I mean, there’s a lot of ways this could go, but we’re at the part of the story where we’re right here at the start line, kind of, to see what might happen.
Andrew (21:55.59)
We’re sort of open to ideas at this point, I guess. think that, and you you’ve been into crypto a lot longer than I have, and you understand blockchain probably a million times more than I do. But I think one of the government’s problems or detractors of this is the tax dollar. I think that they’re worried that, you know, if people start transacting without a middle person, they lose tax dollars.
So if they can figure out how okay, you know the government’s still gonna be able to get their money and still gonna be able to provide security and Social Security and and all the things that they spend money on then it would be a much different Picture, I think if someone came up and said look government here’s the way it works And this is how you still get your money. So I think that the detractors are like look, know what? You’re trying to skirt the tax dollar and I don’t think that’s exactly what they’re trying to do
They’re just trying to make life easier.
Brett Rentmeester (22:54.156)
Yeah, mean, let’s face it right now under current tax law, if you own Bitcoin, transact and they use it to purchase something, it’s still a capital gain. It’s still a taxable event. So, you you’ve got that, but it does bring up a bigger question related to taxes. And we saw it in the math we talked about the current income tax can’t even keep up with the required spending, much less all the discretionary stuff. So at some point, something’s got to change. Of course, one philosophy is, well, we tax more. But another philosophy is
We tax less. I mean, hypothetically, you’ve seen the Trump administration float this idea. And with them, you never really know if it’s their true intention or if it’s kind of a negotiating chip. they floated. We get rid of the IRS. Boy, the US was prosperous under a tariff tax system 100 plus years ago. There might be a total rethink of how does a government function on a sustainable path.
and what is the value proposition to its citizens? And I don’t know that that answer is going to be, well, we’re just going to keep taxing people because I think the experience is no matter how much we tax, it’s not enough because we overspend. So until we get the spending contained and understand what that looks like, you know, that is the problem.
Andrew (24:11.046)
So I want to talk about investment themes that you’re looking at, but I want to touch on AI first. We get this whole deep-seek thing after, Donald Trump takes office and he says, I’m coming up with this big AI investment, we’re going to do this. And all of a sudden China says, go ahead, we’ve got you beat by a million miles. And where is AI right now?
Like if we’re looking at it at a baseball game, we’re probably in the top of the first because so many people just don’t exactly know how to use it or what to make of it. But when someone comes in and says, we can do this a lot cheaper than you can, it kind of throws a monkey wrench into everything, doesn’t it?
Brett Rentmeester (24:55.488)
Yeah, yeah, it does. mean, I guess to answer your question starting out, I think we’re very early in the AI process, but I think like any technology adoption curve, it’s moving quickly. And I think it’s very much understood. Most clients, people I talk to when I ask them about AI and their interactions, basically they’re using it as a better enhanced search engine to get quicker, better results. Right. but I think there are so many sweeping changes that it will allow. It’s kind of like the early days of the internet.
Parents thought, it’s just college kids communicating, et cetera. there was a, hey, people will never trust the internet to make purchases. Look where we are today, right? We’ll never have the bandwidth to have video over the internet. Now look, you know, it’s the TikTok stuff, everything else. So I think it’s gonna be a massive disruptor. You know, there’s certainly the risk of over-hyping it in the short term.
which is why I think there’s always caution with something like Nvidia. I think the DeepSeq event, which I’ve got to be honest, going into the weekend, I had never heard of DeepSeq and coming out every video is about it. But essentially, if we can believe everything out of China, and you have to sometimes question it, but they were able to kind of replicate an open source AI model comparable with chat GPT and these kinds of things for much less cost.
less energy usage, less sophisticated Nvidia chips, et cetera, et cetera. So I think it’s a little shot across the bow that in an open source world, like we were talking about a more decentralized world where everybody can have access to things. You can have success in all sorts of different pockets. It’s not necessarily going to be in these centralized large US companies. So I think though it’s a positive, it’s a net positive in AI. Hey, we can do something cheaper, faster, better. Okay, let’s all learn from that.
get to the next version of this. So I think, you know, there’s been a lot of debate about it. I think right now, maybe the one thing it’s exposed is the risk factor of some of the top AI tech companies that might be priced like monopolies, like they’ve got a lock on the space. It’s questioning that. That’s why Nvidia fell so much. But so far the market’s bounced back. And the question I’ve had is, is this just an isolated event?
Brett Rentmeester (27:17.088)
and maybe going to hurt some of those companies? Or is it a straw that broke the camel’s back of an overvalued market? Right now, it’s looking like something a little more targeted at Nvidia and some of these people that got priced as if they were ongoing monopolies. But I think the AI story is very early and I can talk a little more, but I guess that’s the quick take on Deepsea.
Andrew (27:39.11)
It’s I heard a funny story and this is how far we’ve come from the beginning of the Internet to now. And you know, when we were kids, your parents said, don’t talk to strangers. Don’t ever get into a car with a stranger. Don’t ever share your financial information. And all of a sudden now we’re putting our credit cards in our phone. We’re going on an app waiting for someone who we don’t know to pick us up in a car and take us someplace using a map. So that’s how far we’ve come. So, you know.
Brett Rentmeester (28:04.394)
Yeah. Well, and it’s even worse than that. One of the new AI trends are these bots or these programs that go out and do different functions, autonomous bots, they’re acting on their own. So a lot of times you don’t even know if you’re talking to, there’s some of these influencers now that are actually bots. They’re not even people. So all of a sudden you don’t even know who you’re corresponding with. And maybe a couple of years from now, the car that picks you up won’t have a driver in it. So, you know, we’re all adjusting to
Andrew (28:31.526)
That’s right.
Brett Rentmeester (28:34.542)
the good and bad of all this technology and what it means.
Andrew (28:38.554)
Yeah, I’m following a stock that does these air taxis now that don’t have a driver. They’re just it’s an air taxi and it’s a it’s a pretty wild thing. But what are we looking for going forward? What are investments that you like? Obviously not investment advice. And let’s let’s put that out there that this is not investment advice. This is simply when rock looking at sectors, stuff that they’re interested in.
Brett Rentmeester (29:03.79)
Yeah, thank you for that. I’m for that reason. I’m not going to name individual names, but I’m going to talk thematic sectors. Let’s just talk with inequities. mean, our guidance generally coming into this year has been stay the course. In equities, I’d be very cautious about just buying into the S &P 500 or buying into the Meg 7 and just believing that the big market leaders are going to continue at these kind of valuations. And I think people got a little wake up with Nvidia on.
But I think even in an expensive market, there are pockets of areas that are undervalued and attractive. Now there are some AI kind of names we like, but we call them value AI, kind of undiscovered or maybe have assets not being fully appreciated. And we kind of pair that with actually some private investing, venture capital that is largely focused on AI right now. So can you buy into companies? Yeah, maybe you overpay for a startup, but that’s a lot different math than,
overpaying when something’s already at a trillion dollar valuation. So I think a good way to do it is if you have access to private markets, you do it in a couple of selective names. But beyond that, there are diamonds in the rough. mean, we’ve liked the tobacco industry, even though you could say it’s kind of a dying industry, but it might be the cannabis leader in the future. And a lot of those companies trade at single digit P-E ratios and one company I’m thinking of yields 8 % a year.
So that’s pretty attractive. Energy is interesting, but you’ve got to be careful. think, you know, with the new Trump administration, clearly it’s kind of a pro energy, but part of being pro energy is maybe expanding business opportunities, but that could bring price, commodity prices down potentially. So we’ve historically liked energy infrastructure, master-limit partnerships. These are like the pipelines, the things that actually get energy from point A to point B.
we’ve liked energy and oil in the past. It would be a little more cautious today. We’re looking more at natural gas, which has been really out of favor, but it kind of serves the dual purpose of, it’s abundant here. It’s a cheap energy. It’s fairly green relative to, you know, coal and other things. And I guess lastly, liquefied natural gas, might become a bigger business. There was a kind of a relative ban on it. Trump did an executive order to
Brett Rentmeester (31:28.056)
to reverse that and liquefied natural gas in Europe is something like four to five times the cost here in the US. So kind of opens up that gateway. So I think some of those selective things, just going by, so that’s equities. Bond market, I think you have to be careful in. We’re avoiding taking too much interest rate risk. So for liquidity and things like that, rolling short-term treasuries at these rates still makes sense. But beyond that, if you can take a little illiquidity, we like some private credit.
lending into private markets, and sometimes with a big safety of margin, you can buy into what are considered secondaries, secondary markets. So these are investments that had some illiquidity that other investors, other limited partners are trying to get out of because they want the liquidity. Well, normally you can buy those at a discount from them. So we’re looking at things like that. And then I think hard assets continues to be a core focus for us. So what does that mean? Well, precious metals, gold and silver.
Farmland, especially organic farmland, if you can find an operator that can convert it, you know, it’s the reason I’m paying for a little crate of blueberries, you know, $10 instead of $4 for conventional ones, right? It seems a little ridiculous, but people are paying it. Rental real estate in the Sunbelt markets, I think with the banking crisis a couple of years ago, the lending got tight in real estate. I’m not suggesting real estate everywhere or every type of property, but I think the right rental properties in good markets. And
Andrew (32:35.174)
you
Brett Rentmeester (32:52.846)
cryptocurrencies. I think that’s got to be part of what people consider, but they’ve got to go in and size it appropriately and understand how volatile crypto is. It’s really important.
Andrew (33:03.724)
Is the private bond market something that you guys think is still viable? know, companies selling corporate bonds to raise money and stuff like that.
Brett Rentmeester (33:15.98)
Yeah, I mean, our focus has been less about investing in companies issuing bonds and more about investing in private markets with pools of collateral that you feel comfortable with where, you know, maybe you earn an 8%, 10 or 12 % interest on it. Now, there’s different risks than owning, say, a corporate bond. But yeah, I don’t know if there’s much value in owning a corporate bond right now over a short-term treasury. I mean, the spreads are very tight. There might be a reason to, but
But what I’m talking about is lending into markets that need liquidity, where you can have generally collateral, hard asset collateral or other things you feel good about backing the value of that loan, as opposed to just an operating company.
Andrew (33:59.872)
our viewers range in age from 25 to over 65. So obviously those people are in different age categories, investing categories. Some are retiring or thinking about retiring. Some are thinking about growing their portfolios. How do you go from high risk to low risk? I guess everything in between.
Brett Rentmeester (34:26.818)
Yeah. I mean, again, I think not investment advice, but I guess philosophically, I would say you have one foot in the conventional world and one foot out. So the conventional world are the stock and bond markets. And the stock and bond markets have served investors really well for many decades. But I think they’re both going to be challenged in many ways going forward. history has a lot of lessons about what kind of returns you can expect buying into a massively overvalued market.
And the bond market has lots of lessons about, well, you when the interest rate cycle turns and rates are going up, what kind of expectations do you have there? A lot of times, bond markets can go through decades of negative or positive returns relative to inflation. So we acknowledge people still want some exposure to those and to some degree are going to be tied into them in 401k plans where they have limited choices, et cetera. But I think for everybody, retired, going to retire 25 years old is one foot out of the system.
I think one foot out of the system is if something breaks in the system, what protects me? Maybe it’s precious metals and preferably held in a non-bank vault. So not a line item at a brokerage firm. There are firms that provide that that you’re aware of as well, where you can own physical metal and you can store it in a non-bank vault, a Brinks equivalent kind of vault. So if something happened in the banking system, something happened at another financial institution, you still have a direct tie.
precious metals. I think cryptocurrency deserves a look in everybody’s portfolio at some level, varying ranges of allocations, of course. I think private lending and private real estate, to the extent people have more money, those things, as well as some venture capital. Venture capital is where the new ideas are being funded. So if someone has someone’s an accredited investor or has significant assets, I think those are the areas that that allow, if you’re willing to tie up money, some attractive opportunities.
opportunities. So that is the one foot out of the system. What are the disruptors of the future? What are the things that might be a store of value if we have a period where the stock market and bond market do poorly?
Andrew (36:38.736)
So the importance if you’re somebody who has some money put away, the importance of coming to someone like yourself to say, hey, look, you know what, help me out here because the roller coaster has only just begun according to some of the people I’ve interviewed because it’s, look, it goes up 600 points one day, it can come back 600 points the next. And people are thinking, my God, there goes my, my savings is great. there went my savings. So.
the importance of some sort of investment advisor.
Brett Rentmeester (37:11.822)
Yeah, well, I would say just reflecting on my career, mean, smart people can invest their own money and there’s a lot a lot of ways to do it. But there is a behavioral element, a behavioral element that an advisor can bring and investors left to their own and myself included each of us as a unique investor. Emotions can drive you when everything’s going great. You want to double down on risk and not take any profit. And when the floor falls out, you.
A lot of people don’t have the conviction to buy. So an advisor can really help with the allocation. think today, if you look at people’s allocations, too many with a couple of years of good stock market have way too much just in the stock market. So close to retirement or retired, I think they’re just not looking, a lot of people aren’t looking close enough. They have massive growth, which has been great, but it’s a big risk. No one’s telling them to rebalance and take profit. So I think
I think that’s really important. And I think the other side to it is getting exposure to some of these things that are not as mainstream. So if you want to just buy stocks and bonds in the S &P 500, that is a strategy. You can probably do that yourself. But if you want to do some of these other things, think guidance and access become very important. And finally, I’ve observed a lot of effective planning that is not just related to an investment advisor, but has to do with a client’s tax situation and their CPA.
or their attorney and their estate plan at different junctures in life, there’s key decisions and key kind of planning opportunities that a good, well-constructed team bring to the table. Now, an individual could replicate that. They just need to make sure the left hand’s talking to the right hand. And oftentimes the CPA and the investment person and the estate attorney aren’t really talking. You need someone to coordinate that process. Again, it doesn’t have to be an advisor, can certainly be an individual that wants to play that role. But I think that’s a key
component of not only wealth preservation, but wealth enhancement of minimizing taxes, getting the estate plan right, transferring assets to kids outside of a taxable estate. know, the list goes on and on.
Andrew (39:18.244)
And I know you, Chris and Brandy have that part of your company that does that. I’m sure you have stories of people have come to you in disarray and you’ve put together a team of not only the financial stuff that you do, but the CPA and the planning and all of that to help them minimize their tax, maximize their profit and grow their wealth. So, I know that you guys do that.
Brett Rentmeester (39:46.882)
Yeah, absolutely. And I would say the one fact pattern that’s very ripe for this is someone with a business that might sell. Sometimes a year or two before a sale, there are tons of planning opportunities of how things can be structured to not only get a successful exit, but get the right tax outcome and leave your estate with as much money as possible. So those are great fact patterns to work with.
Andrew (40:12.816)
Brett, know you guys at Winrock do a ton of research. Where can we find your research?
Brett Rentmeester (40:18.05)
Yeah, really the best place is windrockwealth.com. It’s our main website. We have a research section. We post these interviews. We post articles and blogs we do. And that would be a great place to start.
Andrew (40:28.76)
And social media, think Winrock is on Twitter as well, aren’t you?
Brett Rentmeester (40:32.428)
Yeah, we’re out there on Twitter as well. can follow us there.
Andrew (40:36.72)
So Brett, thanks so much for joining me. I really appreciate it. And it was a, think it was a great talk, informative, and we’ll see where this year takes us with the peaks and valleys.
Brett Rentmeester (40:46.03)
Should be exciting. Thank you, Andrew.
