Episode 82
Inflation, Oil & Markets: What You Need to Know Right Now
After a bullish start to the year, markets have been forced to reckon with a very different reality. Rising oil prices, renewed inflation fears, geopolitical instability, and growing pressure in private credit have all changed the tone of 2026 far faster than most investors expected.
In this episode of Expat Wealth, Richard Taylor, dual UK/US citizen and Chartered Financial Planner, and Brian Dunhill – founder of Dunhill Financial, look back on a chaotic first quarter and unpack what actually matters for long-term investors. They discuss why inflation, not just stock market volatility, remains the bigger concern, how higher energy prices can ripple through the entire economy, and why moments of market stress often create valuable tax planning opportunities.
They also explore the renewed case for commodities and value stocks, the risks building inside private credit and alternative investments, and why opening retirement accounts to illiquid assets could create serious problems for everyday investors. Along the way, they make the case for staying invested, resisting panic, and remembering that the biggest long-term investing mistakes are usually driven by fear or greed.
In this episode of Expat Wealth, Richard and Brian discuss:
Why Q1 shifted so quickly from optimism to concern, and what that tells investors about market sentiment and economic surprises.
How oil prices, commodity moves, and inflation fears are shaping portfolio positioning more than stock market headlines alone.
Why tax loss harvesting can be one of the most valuable strategies during volatile periods, especially for long-term investors.
What recent stress in private credit and alternatives could mean, and why these investments may be unsuitable for many retail and retirement portfolios.
Why trying to time the market often backfires, and why staying disciplined through uncertainty has historically been the better path.
—
Expat Wealth is supported by Plan First Wealth. Plan First Wealth is a Registered Investment Advisor serving fellow expatriates and immigrants living across the US on matters such as retirement planning, investment management, tax planning and non-US asset management.
Expat Wealth is affiliated with Plan First Wealth LLC, an SEC registered investment advisor. The views and opinions expressed in this program are those of the speakers and do not necessarily reflect the views or positions of Plan First Wealth.
Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Plan First Wealth does not provide any tax and/or legal advice and strongly recommends that listeners seek their own advice in these areas.
ABOUT RICHARD:
Richard Taylor is a British expat, dual citizen (UK & US). Originally from Bolton, he now lives in Greenwich, CT, where Plan First Wealth has its head office.
As the firm’s leader, Richard launched Taylor & Taylor, now Plan First Wealth, and continues to fuel the firm’s growth. Richard is a Chartered Financial Planner (UK – CII) in addition to holding the IMC (CFA UK) and Series 65 (US – FINRA).
Connect with Richard on LinkedIn
TRANSCRIPT:
Brian:
[00:00:00 – 00:00:13]
If there’s anything that I am, it’s petrified of cash because inflation is the fear that we had last year and now it’s really kind of showing itself once again.
Richard Taylor:
[00:00:13 – 00:00:17]
It doesn’t matter how well things are going, there’s always something lurking.
Brian:
[00:00:17 – 00:00:27]
What happens if you deregulate everything inside of a retirement account? Well, you’re going to have people hurting their money that’s supposed to take care of them during. During their retirement years.
Richard Taylor:
[00:00:29 – 00:01:39]
Welcome to Expat Wealth, a Plan first wealth podcast dedicated to helping ambitious expatriates in America and Americans overseas thrive. I’m your host, Richard Taylor, and Plan first wealth is the business I founded and run today. And we work with successful expatriates, immigrants, and internationally minded Americans to make the most of opportunity and avoid the expat landmines. First, a quick disclaimer. While Plan First Wealth, LLC is an SEC registered investment advisor, the views and opinions expressed in this program are those of the speakers and do not necessarily reflect the views and positions of Plant First Wealth. Information presented is for educational purposes only. Now, if you aren’t already receiving our emails, please go to our website, www.planfirstwealth.com and sign up there. It’s free and you’ll be notified every time we drop a new episode and so much more. Okay, let’s get back to this week’s show. Welcome back to another episode of Macro Aggressions from Expat Wealth. This is the show where I bring my the myth, the legend that is Brian Dunhill on the show to talk about everything that’s going on in the world and, you know, put the world to rights, fix all the problems.
Brian:
[00:01:40 – 00:01:42]
Do we have enough time to go over all of that?
Richard Taylor:
[00:01:42 – 00:01:44]
Well, you know, we’ll pick our battles.
Brian:
[00:01:45 – 00:01:50]
It’s been the craziest quarter and, well, we just, we just need a coin. What’s Trump going to say?
Richard Taylor:
[00:01:50 – 00:01:54]
Today we’ll just focus on and solve the big issues. You know, that’s what the world needs right now.
Brian:
[00:01:54 – 00:02:03]
Perfect. Perfect. So you’re giving me the line of being the genie and you get three wishes, so you get three questions today.
Richard Taylor:
[00:02:03 – 00:02:04]
Right. Okay.
Brian:
[00:02:04 – 00:02:04]
Well.
Richard Taylor:
[00:02:05 – 00:02:18]
Well, we’re actually gonna do something a little bit different because normally we’re trying to look out into the future based on what’s going on, but we’re recording this slightly early because Brian is well right now. Where are you? You’re in Spain.
Brian:
[00:02:18 – 00:02:19]
Palamos in Spain.
Richard Taylor:
[00:02:19 – 00:02:24]
Oh, very nice. All right. For some. But next week you’re in Brazil.
Brian:
[00:02:24 – 00:02:34]
We get to talk to the beautiful American Club out there about the new book that has come out. If you haven’t checked it out, please do. Called Borderless Living, available on Amazon.
Richard Taylor:
[00:02:34 – 00:03:14]
So o’ Brien’s in Brazil next week, so we’re recording this a little bit earlier and we thought we would, we thought we’d make it more of a Q1 review. It’s been, look, it’s always a hell of a quarter, but Jesus, this has been a hell of a quarter. And we thought it’d be a good opportunity to take stock because the way things are changing right now, that when this comes out on the 16th, this is the 2nd of April, when this comes out on the 16th of April, God knows what’s going to have happened, what the situation is going to be. So we’re going to cast our minds back the last three months and, and, you know, play therapist and, and try and work through our, work through our fears and our horror and what we think, what makes some sense out of it.
Brian:
[00:03:14 – 00:03:29]
The, the beauty is, thankfully the, the Donald likes to do a little window dressing and helped us out this last week to have a little bit of a recovery. Whether that was to do with window dressing, you know, window dress, that’s old news.
Richard Taylor:
[00:03:29 – 00:03:36]
That was yesterday. Then he gave a speech and everything fell out of bed again. I can’t keep up, honestly, mate.
Brian:
[00:03:36 – 00:03:40]
Weeks, months, years, all happening in minutes.
Richard Taylor:
[00:03:40 – 00:04:12]
I can’t keep up. But do you remember, do you and it’s a long time ago, three months. Do you remember how bullish everyone started the year? And as we will talk about ne, you and I are not especially bearish going forward. But just do you remember how confident everyone was? The economy is robust, companies are doing well, IPOs rates are going to go down. Even Jamie Dimon, New York’s America, the world’s premier risk manager, was sounding cautiously optimistic.
Brian:
[00:04:12 – 00:04:15]
Just so you know, Richard, you are the most optimistic Brit that I know.
Richard Taylor:
[00:04:16 – 00:04:18]
That’s 10 years in America is a.
Brian:
[00:04:18 – 00:05:44]
Great title you’ve turned in. You’ve been baptized in the American waters and I love that. But you’re spot on. We started the year completely optimistic about all, all of things global, especially with the devaluation of the US Dollar. And here by the end of the first quarter, we’re reverting to essentially going back to a strong dollar. That is a flight to safety in the dollar. And the best positions in our portfolios, as we talked about last month, are commodities, where on not a fear of the stock market falling apart, we’re more on a fear of inflation taking over, which is One thing that I don’t understand, why Short term U.S. treasuries and money markets are just growing so significantly in assets because if there’s anything that I am, it’s petrified of cash. Because inflation is the fear that we have last year and now it’s really kind of showing itself once again. Inflation really is rooted out from CPI because essentially it doesn’t take into effect oil prices. But oil prices affect just about everything. And all we’ve been talking about for the last four weeks is oil prices going up. If oil prices are going up, we’d expect the prices of just about everything else to start to go up.
Richard Taylor:
[00:05:44 – 00:06:07]
Everything else, you know, everything gets to us via trucks pretty much. And so just, just, just that part of it, I, I was reading or listening to something the other day that’s talking about, I think there’s a big aluminium plant out in the Middle east somewhere and apparently that’s going to, that’s been hit and that that’s likely to cause the cost of cans to go up significantly, which means our beer is going to get more expensive. Like everything.
Brian:
[00:06:08 – 00:06:12]
Well, unless we buy draft beer and then they recycle that as big old kegs.
Richard Taylor:
[00:06:12 – 00:06:21]
But yes, I don’t buy cans of beer. I buy bottles of Modelo. So I feel, I feel completely safe from all the impacts of this, of this disaster.
Brian:
[00:06:21 – 00:06:27]
Wait, wait, isn’t it. Wasn’t it last year that Modelo and Constellation Brands became the best selling bureau above Budweiser?
Richard Taylor:
[00:06:27 – 00:06:52]
It was last year or the year before? No, it was, it was after the Bud Light did something that was too woke. I can’t remember what it was. It wasn’t too woke. It was like support of transgender rights or something. And they, and everyone, everyone, the MAGA crowd boycotted Bud Light. Now I find that absolutely ridiculous, obvious for obvious reasons.
Brian:
[00:06:52 – 00:06:55]
However, the price of beer going up or something else.
Richard Taylor:
[00:06:55 – 00:07:15]
No, no, I feel strongly about what I’m about to say. I feel very strongly. Bud Light is an appalling beer. Modelo is a great beer. So whilst I find the reasons for the switch absolutely ridiculous and stupid, the fact that Modelo top of that, the top now I think the world is a better place for that.
Brian:
[00:07:16 – 00:07:57]
I will not deny that. But I’m going to go the next step. First of all, as a Belgian born individual, if it doesn’t have 12% in there, it’s not a real beer. Second of all, there shouldn’t be just one beer on top. I think variety in beers depending on season what you’re eating just like Wines. You would never say, this is my only wine. Did you hear about the. And I forget the name of the restaurant, but the restaurant that became number one in the world from number 50 in the world. How they did it. Nope. So the chef took his entire crew down to. Down to what was rated the best restaurant in the world.
Richard Taylor:
[00:07:57 – 00:07:58]
The one in Copenhagen.
Brian:
[00:07:58 – 00:08:05]
Yeah. Where the guy beat. Beat all his employees. I don’t know if I’m supposed to say that, but I got in trouble for that. And he quit.
Richard Taylor:
[00:08:05 – 00:08:06]
Yes.
Brian:
[00:08:06 – 00:08:36]
Yeah. Can’t scratch that up because Richard enjoyed it too much. So essentially he went down there and they all came up with, oh, we liked how they did their napkins, we liked how they did their entree, this, that, and the other. And he said, what didn’t you like? They found two things. Their coffee was just average. And the beer list basically was. Here is your. Whatever it was Heineken. And we have Heineken on tap as beer lovers. Whenever you go to a fancy restaurant, basically you get no choice.
Richard Taylor:
[00:08:38 – 00:08:43]
I’m visibly offended. I’m, you know, Heineken at a top restaurant, like, come on.
Brian:
[00:08:44 – 00:09:15]
And. But that’s very typical any of the Michelin stars. So essentially he brought in a beer sommelier and a coffee sommelier, and the beer sommelier essentially built a pairing menu. If you’re ordering this type of food, go ahead with this. So essentially he paired those up and the variety made them the best rated restaurant in the world. And I tend to think that’s why I won’t say I drink this one type of beer. I want variety for different meals, different seasons, etc.
Richard Taylor:
[00:09:16 – 00:09:17]
Okay, I. Okay, what?
Brian:
[00:09:18 – 00:09:19]
So I’m the marketing person.
Richard Taylor:
[00:09:20 – 00:09:33]
How do we. Now you’ve dropped. Well, now you’ve dropped that critical nugget for Q1. Peter, the folks at home. The folks at home, that was what they needed to know about Q1. That’s. That that changes everything.
Brian:
[00:09:34 – 00:09:38]
We need more beer. We needed more beer.
Richard Taylor:
[00:09:38 – 00:09:40]
We can agree on that. We can agree on that.
Brian:
[00:09:42 – 00:11:00]
End of the day, commodities have gone up in a significant way. Our position for commodities is through First Trust ftgc. That’s not me promoting their. Their fund. You can look up what’s in our portfolios at any given time. They’re up 24% year to date. We bought it as a barbell strategy against our fixed income just in case inflation came into place. Because Trump has a ton of policies. We weren’t expecting him to invade Iran and do so now, like we were talking about. Oil prices really affect everything else when it comes to pesticides. Most all of them are reflected on the price of oil. And so essentially we can expect all commodities to go up when it comes down to whether it be coffee, wine, you know, barley, any of the things that go into all of your favorite drinkable items. The surprising thing is we’ve had this huge harvest of potatoes this last year and I didn’t even know. There is a publication called my potato Daily News where we can get our daily potato prices. So the one commodity that might not go up are potatoes. And that will be our savior. You know, lots of fritz next year. Next year.
Richard Taylor:
[00:11:00 – 00:12:55]
You know what? I feel better already. Thank goodness we had this meeting today. Stop worrying. We have lots of potatoes. You know, I actually think there’s, there’s just, if we just step back a second, I actually think there’s like a really, there’s a valuable lesson here. And that is the point I was making before January and early February. The, everyone was super bullish, everyone was super confident. Yes, there was some signs of stress in the economy, right? There weren’t. The job creation isn’t great. Jobs aren’t, there’s, there’s not massive layoffs, but job creation has slowed. And that’s a concern for people. But in general, people, for the reasons I mentioned before, people were pretty, pretty bullish. And it reminds me going into 2023, remember 2022, horrible year. Stocks down, bonds down, inflation through the roof. Everyone, myself included went into 2023 predicting a recession and it didn’t materialize. And it said the market took off, took off 23, took off, 24, took off 25 with a little wobble for the tariffs and with the kind of. The inverse was this case this year. And I, I do remember, I, I did. I, you know, I’m going to put myself on the back here, although I’ve got no way of proving it or evidencing it. But I do remember thinking the fact that everyone is so bullish right now, it’s a contrarian indicator almost. And the fact that we’re having this wobble right now, now this wobble could be a lot worse. It could get a lot worse. And it’s entirely man made or manufactured. But I think it’s just an important lesson that it doesn’t matter how well things are going, it really doesn’t matter what we think about the economy or companies or earnings which are all doing great. There’s always something lurking. There’s always something that’s going to happen whether it’s 9, 11 or whether it’s Tariffs or whether it’s inflation going crazy in 2021, there’s always something lurking around the corner.
Brian:
[00:12:56 – 00:13:07]
It’s amazing that you can take a Brit out of the uk, but you’re always going to go back to those old quotes from Macmillan. Events, dear boy. Events.
Richard Taylor:
[00:13:08 – 00:13:10]
Yeah, that’s what I was doing. Yeah, yeah, that’s exactly.
Brian:
[00:13:10 – 00:13:11]
That should be.
Richard Taylor:
[00:13:11 – 00:13:11]
Thank you for.
Brian:
[00:13:12 – 00:13:13]
That’s it. That’s exactly what I was.
Richard Taylor:
[00:13:13 – 00:13:14]
Thank you for attributing it correctly.
Brian:
[00:13:14 – 00:14:49]
You know, I just hear it with the British. It’s what we always have to be concerned about. We don’t know what’s going to dislodge things, but events are what we need to be paying attention. Paying attention to. And that’s what’s going on right now. But what we’ve noticed is not a huge disruption to the overall stock market. There’s parts of the stock market that are getting hit by harder than others, but the s and P500 is only down 5%. This isn’t even defined as a correction. Right. Emerging markets are getting hit harder because the dollar is going up, not because those companies are doing worse. So am I. Am I starting to not add to allocations in emerging markets? Absolutely. But essentially, in our action plan, we know everybody is playing the same game. Be careful of inflation. That’s where essentially, commodities shot up, energy stocks have shot up, value stocks are up and growth stocks are down. So if we go back to the 70s like we were talking about last last month, during the 70s, growth stocks were hideous, value stocks were fine. So we were basically saying if we get to 10% inflation, we want to have 50% in value stocks, 25. And in commodities, 25% in energy stocks. That’s the composition of the s and P500 was 25% energy stocks. And that saves us from the heightened inflation over 10%. So that’s all that happened this last month, is people didn’t freak out about the stock market, they freaked out about inflation.
Richard Taylor:
[00:14:50 – 00:15:12]
Yeah. I feel like I’m going to regret asking you this. It’s the 2nd of April, because. I’ll go on a tangent. No, no, no, no, no. Because we’re going to be proved. We’re going to look wrong. We’re going to be wrong, basically. But it’s the 2nd of April now. This is going to go out on the 16th. So much is going to happen in those two weeks. Like, do you think, do you think we’re still going to be in, in this?
Brian:
[00:15:12 – 00:17:17]
It’s hard to say because it looks to me like Trump wants to exit this. He wants to pull his taco. But it looks to me like Iran doesn’t have the concessions to protect themselves to be able to do so. And that means this could be elongated to any time frame. Iran’s figured out that they don’t need an atomic bomb. They essentially have one of the most important pathways, one of the three most important pathways in the world. And therefore they can hold that hostage anytime they want. And now they’re talking about levying a toll on every single boat that wants to go through the strait. That’s fascinating. To where they might find new revenue streams for being attacked. So I tend to think this could go any way, shape or form. If we would have just recorded this on April 1st, we could have just said, hey, that was an April Fool’s joke that we predicted that. So I’m going to go with more wavy. It could go either way. And the one thing that, that we, we want to pay attention to is where, where oil prices go from here, where other commodity prices go from here, because typically prices go up faster than they go down. And where that becomes extremely important is a lot of the facilities that have been attacked will take three to five years to get back online. If that takes three or five years, we could have elevated prices for a longer period of time, no matter how Iran plays out. And we need to set ourselves up for that. I don’t know if you saw the article in the Economist about how Cuba has become the fastest play into renewable energy because of being cut off from Venezuelan oil. The rest of us have to take note. Okay, energy prices are that much higher. Can we make a pivot towards renewable energy or other forms of energy instead of just absorbing it and pushing it back out?
Richard Taylor:
[00:17:17 – 00:18:00]
Yeah, I think this is absolutely going to lead to, so renewables taking a bit of the culture. The attitude towards renewables seems to have taken a turn in recent years. And I think this is going to absolutely put the spotlight back on it because it just shows how vulnerable, not the U.S. u.S. Is, is insulated from it a little bit more because of the shale and fracking revolution. But, but the, but still, it’s not immune from it, though. And the gas prices are rising here. And as we talked about, when gas prices rise in America, people get very, very upset and prices are rising. Groceries getting more expensive. This is really unpopular. I, I just think it’s really unpopular and it’s going to get much more unpopular very quickly.
Brian:
[00:18:01 – 00:18:25]
It’s, it’s disaster for, for the Republicans, for the midterms, which I don’t think many people are crying about at this point in time when you look at Trump’s popularity ratings. But at the end of the day it’s how they’re going to react in the next couple of months to try to, to, to usurp that in some way, shape or form and that we have to shrug our shoulders and say let’s, let’s see how that plays out.
Richard Taylor:
[00:18:25 – 00:19:36]
I’m excited to announce that Expat wealth has its first sponsor, the Global Financial Planning Institute. The GFPI exists to provide education, community tools, resources and ongoing research for financial planners and other advanced financial professionals working with international and cross border clients in the US And Americans abroad. I’m a GFP Institute fellow and I’ve put all our employees through their GFPI programs when they join us. I’ve met some great people. I’ve learned a ton. It’s a genuine community of internationally minded folk and doing their best to serve their clients properly and critically sharing what they know in the oftentimes challenging and ambiguous US Cross border environment. And as anyone in this sector will tell you, you’re always learning. So if you work with international clients and, or Americans abroad, or if this is an area you’re looking to get into, check out the gfpi@www.gfp.in stute you will be glad you did and I hope to see you there soon. One of the things we were going to say right was periods like this never let a good crisis go to waste. And this is an opportunity to tax lost harvest.
Brian:
[00:19:36 – 00:19:37]
Absolutely.
Richard Taylor:
[00:19:37 – 00:19:40]
So do you want to just tell the folks what, what we mean by that?
Brian:
[00:19:40 – 00:21:30]
So tax harvesting is that opportunity for Richard and I to say to any of our clients, hey, we’ve lost money. Hey, this is great news. We can go ahead and try to make sure we can minimize future taxes. So anytime we have a loss on the US Side of things, we can go ahead and sell it and we can harbor those losses to offset gains for any time in the future. We can take $3,000 against our US earned income and we can pass forward as much of that as we want for as long as we want. So a great opportunity to clean up our portfolios at different times and move it incremental ways. In a lot of foreign countries we’re able to do this in different ways. So you have to look at how it works with your double taxation treaty. If you have to pay your taxes first in a foreign country and naturally you’re going to have to look at it in that currency Whether that be in Euros or gbp. So don’t always just think about it in the American way, but it does apply in other countries in those ways. We’ve been tax harvesting significantly and because of the duration of this, I think of our portfolio as kind of our starting 11 for our football team and then we have our kind of second team and now we’re already on our third team because we’re having to tax harvest the tax harvest positions because it’s continued to go down. I don’t see that as a problem because you have to stay out for 30 days that we’ll get back to some of the original positions that we would like and there’s enough positions to, to root out there and that’s giving us the opportunity to get out some of those growth stocks and get into some of, some of our, our, our good blend positions that have a little bit more growth and a little bit more value. I’m sorry, a little less growth.
Richard Taylor:
[00:21:30 – 00:23:14]
No, no, that was perfect. I have a great real life example of this from last year. So this wasn’t, I think you’re talking more there about there’s direct indexing. So there’s two ways to tax harvesting. Well, there’s more than two ways but the. You can. What direct indexing or which is where you will hold lots of individual stocks gives you loads more opportunity for tax loss harvesting. And we do that, but we also do it on a, on a smaller scale with just. With ETFs. And last year we had a client and which allows us to do it for smaller clients as well. People have got less invested. Last year, just before the Liberation Day fun, three or four months before that, we’d invested some money for a client. Not, not a huge amount, but you know, enough that this client was nervous about investing it. And then what, two, three months later we had Liberation Day. Market fell off a cliff. Went down like 20 at one point. And this client messaged me saying check it out, should I just, you know, we’ve all had many of these messages over our careers and we were like, nope, you absolutely shouldn’t. And he didn’t, to his credit. And then we had our review much later in the year, October, November time. And by that point he was well up because if everyone remembers, the market cratered and then it took off again. I’m not saying that’ll happen this time, but it could. And when we met with him, he was well up on where he’d been when he emailed us. He was well up on where he was when he invested and we could see we had just over $20,000 of harvested losses to carry forward to offset against future gains. So he put that crisis to very good use.
Brian:
[00:23:15 – 00:23:33]
It’s magical in those types of ways. And what I’ll remind you is we have a lot of data to be able to pull. And in the last hundred years, any time that America has gone to war with another country, it’s only ever taken at maximum six months for the stock market to get back to profitability.
Richard Taylor:
[00:23:33 – 00:23:33]
Really.
Brian:
[00:23:33 – 00:23:57]
So don’t think that wars are not profitable. Wars are extremely profitable because typically we take on debt to go ahead and pay for the war and we put them into productive use in some way, shape or force form. When I say productive use, I’m not saying tanks are the productive use. I’m saying the essentially it economically productive because debt is cheaper than economically.
Richard Taylor:
[00:23:57 – 00:23:58]
We’re all grown ups here.
Brian:
[00:23:58 – 00:24:03]
We can help. Help me take my foot. Yeah, help me take my foot out of my mouth. As you.
Richard Taylor:
[00:24:03 – 00:24:03]
No, no,.
Brian:
[00:24:06 – 00:24:23]
But, but that’s, that’s to where essentially we shouldn’t be panicking about this from a stock market vantage point. We should be looking at it as how should we be changing the reflection of our portfolio and in the meantime taking advantage of those tax harvesting opportunities.
Richard Taylor:
[00:24:24 – 00:25:39]
You know the famous, what’s the famous phrase, right. Bears sound smart, bulls will make you money. Yeah. As in it’s easy to have a problem to every solution. It’s easy to the negative, it’s easy to see why things won’t work. But ultimately history has shown us time and time again that it pays to be positive, it pays to be optimistic about the future. That no matter what’s going on in the world, what is it Nick Murray says, other than love, human ingenuity is the most powerful force in the world. Since the dawn of time, humans have got up, woke up and strived to do more, achieve more, succeed more for them and their families. And yeah, there are exceptions to that. But by, in general that is, that is human nature. And companies, real businesses are the best manifestation of that. They’re the best way of, the best way of harnessing human ingenuity. And I, and I think America is the best, is the best example certainly modern times of that ingenuity being harnessed in an economy. So I’m not enjoying what’s happening right now. I think so much of this is just completely own goals. But opportunities will arise and I’m cautiously optimistic.
Brian:
[00:25:39 – 00:26:24]
Absolutely. I think of it as we’re in gym class. As long as we show up we’ll get AN A. And 70% of the time the market’s up just by showing up. So Peter Lynch, I think he said it brilliantly, which was the problem with trying to sell out of the market and buy back into the market is you have to be right when to sell and when to buy. And the best of traders are only right, what was it, 60% of the time on each. Which basically means 60 times 60 comes out to 36% of the time. So if you’re one of the best traders, you write 36% of the time. But if we’re just average and we just own in the markets, we’re right 70% of the time. Which would you rather be right 70% of the time or be the best of the best? To be right 36% of the time.
Richard Taylor:
[00:26:27 – 00:27:03]
Just before we go, I sent you a couple of articles before we. I can’t remember this last time or the time before we talked about this, this brewing. I don’t know if I want to call it a crisis, but the negativity surrounding private credit or alternatives in general. Right. The last couple of years has been, I’m going to call it a gold rush. It’s been a gold into alternatives. And private credit has kind of led the charge on that. And we’re seeing it have a real wobble. And one of the main players, Cliff Water, has apparently been hit with 14% redemption requests. So I just wanted to see what you, what you’re making of all this.
Brian:
[00:27:03 – 00:27:51]
It’s a classic run on the bank. If there wasn’t a problem before this, it’s, it’s now a problem because everybody wants to get out before they’re stuck with it. You know, when Jamie Dimon describes it as there are going to be many more cockroaches in here, we know that we’re going to have defaults, but when you’re going into private credit, it’s like going into high yield bonds. When we’re buying high yield bonds, how we look at the portfolio is what is going to be the percentage of defaults, not, not what our yield’s going to be, but what’s going to be the percentage of defaults in these private credit deals, it’s got to be the same type of thing. Most of the individuals inside of them don’t understand that, that, hey, a few cockroaches, that’s like if you buy some real cockroaches, not the end.
Richard Taylor:
[00:27:51 – 00:28:18]
This is, this is classic. Why for the vast majority of retail, this is inappropriate. It’s just classic. The first sign of, the first sign of like any negativity and 14 requests on a fund where they know there’s only 5% can be honored. I mean they’re actually on it a bit more. But legally they only have to honor 5% like this. Just, it just, you can just say to your blue in the face to people about the risks and the profile and the restrictions, but when the rubber.
Brian:
[00:28:18 – 00:29:18]
Meets the road, some of my smartest clients, what they’re contacting us about is when do you think we should be buying these stocks of the companies that are managing these? Because these are smart guys and there’s going to be huge money to be made on the losses of the backside. So we’re keeping an eye on that and I think everybody else should be as well. These, these are not horrible companies and yet they’re, they’re being traded as if they should be going towards bankruptcy. So as, as the expression goes, never try to catch a falling knife, but once it hits the ground, pick it up and then go ahead and run with it. Well, maybe not run with it, but you know, go ahead and, and get back to, get back to cooking, clean it off, etc. That’s what we’re looking at is where is it going to hit the bottom so that we can go ahead and pick that up, clean it off and go ahead and run with it. And these companies will do great because there is a great market there. But it just got oversaturated with the wrong clients and you know, they’re going to be stuck in there for, for a period of time.
Richard Taylor:
[00:29:18 – 00:29:53]
These companies are killers. You know, they are the, you know, Aries, your, your Carlisle’s, your Apollos. They are killers. Yeah, they’re very successful. Cliff Water. And then I also sent you, apparently the Department of Labor has just greenlighted private alternatives, private assets, even cryptocurrency to be available in employee retirement accounts like 401ks. So I feel I know what your opinion is on this, but I thought I just take on that.
Brian:
[00:29:53 – 00:30:16]
Well, you know, you can try to protect people from their own selves, but sometimes they’ll go blow themselves up, et cetera. I’d say most people, this is a great opportunity for them to have a bigger open gambit. Expect huge problems in the next five, ten years from individuals hurting themselves in their retirement accounts.
Richard Taylor:
[00:30:16 – 00:30:17]
That’s a terrible idea.
Brian:
[00:30:17 – 00:31:14]
And we can’t be surprised that all of a sudden we built up all these rules. The SEC came along and saved ourselves from having another great Depression because we had two exotic products we had too much margin, we had too much debt in the markets. Now, you know, 80 years later and we’re going right back towards that same center of how can we over lever ourself? You know, why do I not like cryptocurrencies? Well, it’s because without the regulation people could go ahead and lever them up into huge amounts. And all of a sudden you have all the problems that brought about the Great Depression in a new currency that has no basis. So now what happens if you deregulate everything inside of a retirement account? Well, you’re going to have people hurting their money that’s supposed to take care of them during, during their retirement years.
Richard Taylor:
[00:31:14 – 00:31:50]
On the one hand, I guess you could say, yeah, well this is long. Any investment in private assets is a long term play. Crypto, not so much, but real assets, private assets, long term play. And what’s longer than retirement accounts? So I guess I understand that argument, but just let’s call this what it is. It’s excellent liquidity for the institutional and mega wealthy already in there. And that’s all these small retail investors are just gonna be left holding the, holding the bet, holding the bag. It’s going to be. I think it’s terrible. I think it’s absolutely terrible and so unnecessary.
Brian:
[00:31:50 – 00:32:23]
If you’ve had, if you have Richard’s net worth, you can have some private equity, you can have some private debt because you have enough money and everything else to take care of your retirement. But if you need that annuitized stream and it’s an average size account, what’s the average IRA in the States? I can’t remember. It’s like 4 or 500,000. It’s not large. So all of a sudden the amount that you need in there to create a regular income is the majority of the portfolio. You don’t have room for these things. What’s going to happen when potentially trapping.
Richard Taylor:
[00:32:23 – 00:32:58]
Well, yeah, what’s gonna happen when these things get gated or blow up and then someone leaves a job and wants to move their 401k into an IRA or wants to start drawdown? They can’t because it’s all tied up. I can’t even imagine. I’ve experienced, coming from the offshore world, I’ve experienced some of this. We pick up portfolios where someone’s been dropped into some God awful student accommodation fund or some ground rent nonsense. It’s inevitably blown up. It’s just a horror show, a byzantine horror show. And doing that writ large to, it’s just going to be, it’s not going to be good. I don’t think.
Brian:
[00:32:59 – 00:33:20]
If all of a sudden you look at the S&P 500 and it’s given us 10.5% per annum for close to a century, if all of a sudden you’re saying 10.5% is not enough money, maybe we should be really leaning on being too greedy. Right. And the two things that drive the market are fear and greed. So if people are getting too greedy, they’re going to go out and get themselves slaughtered.
Richard Taylor:
[00:33:21 – 00:34:14]
Brian, that is that you’ve just. My. I have said this. You know what $1 million compounded at 10% is in 30 years? It’s 17 and a half million dollars. The fact that you can, the fact that you can, you can harness a 10% what has something that’s historically delivered 10% a year for almost no costs, no messing around, no difficulties, and it. That lift left unchallenged. I, I can’t comprehend why professional traders. Yes, but why people feel the need to trade because you’re taking all this risk for what. What extra return are you hoping to achieve? And what are you actually more likely to. To achieve, which is a lower rate of return when all you need to do is plug it into the US stock market to generate 10% a year, which compounded over 30 years, is life changing. Why. Why are we searching for so much more?
Brian:
[00:34:15 – 00:34:40]
It’s. You can’t win if you don’t play. It’s the lottery fallacy. I want to be that guy that did so much better. It doesn’t sound great at the bar when you say I’ve invested all my money in the s and P500, but to me that is the safe way to go. You get the free lunch of diversification. You get the free lunch of low fees and, and essentially great growth over.
Richard Taylor:
[00:34:40 – 00:34:44]
The course of time without risking blowing it all up or massively underperforming.
Brian:
[00:34:45 – 00:34:45]
Absolutely.
Richard Taylor:
[00:34:45 – 00:35:24]
All for zero effort. I just, it blows my mind that, that how much effort. I listen to all the investing podcasts, you know, all the big ones, and they’re great. But they’re all really, they’re all like trading entertainment and, and, but, but they’re hugely popular and it tells me that people are, and I see it on Reddit as well. A lot people are actively trading and I just don’t get why when I can get 10% on average a year just by buying an S&P 500, I want more diversification. That, but it just, my mind boggles. What are we trying to. What, what it’s all for What. And at what risk?
Brian:
[00:35:25 – 00:35:42]
Well, but this, there’s exceptions to that rule. There’s, you know, congressmen that have all this, this insider information and can trade on it. There’s the Trump administration that can go ahead and invest before a war is launched, et cetera, et cetera. So there are groups that. I can understand why they’d be tr.
Richard Taylor:
[00:35:42 – 00:35:45]
Yes, I can. I’m glad you brought that.
Brian:
[00:35:45 – 00:35:46]
I just got canceled from the podcast.
Richard Taylor:
[00:35:47 – 00:36:27]
I’m glad you brought that up. That is absolutely despicable. What. What is happening on Kalshi and polymarket and, and the. Apparently Hexith tried to buy into a defense fund before the war and was rejected. That’s how we know about it. Which. It, It’s. It is awful. I, I mean, talk about undermining trust. And I know both sides are guilty of this. I know this is not unique. It’s like all things. It’s magnified and taken to the, the. It’s times 100 under this administration, but it’s disgusting and they need to do something about it.
Brian:
[00:36:28 – 00:36:37]
I can promise you at some point in time, most of them will end up in jail, just like the first Trump term. But we have to wait until we get some.
Richard Taylor:
[00:36:37 – 00:36:41]
But, but it’s a wider problem. It’s not just, it’s not just Pelosi.
Brian:
[00:36:41 – 00:36:41]
Absolutely.
Richard Taylor:
[00:36:41 – 00:36:42]
They need to stop.
Brian:
[00:36:42 – 00:36:52]
Yeah. The Democrats are just. Yeah, absolutely. Absolutely. You know, it’s. They’re not going to vote for it until essentially you’ve got a total changeover in power.
Richard Taylor:
[00:36:52 – 00:37:00]
Yeah. Okay. Right. Well, now we’ve put the world to rights yet again. Anything else we need to add, or are we. We done? I’ll let you get back to your.
Brian:
[00:37:01 – 00:37:09]
We talked about potatoes, we talked about beer. We talk about all the important things. Right. Next time we need to have a potato and a beer, we need to. We need to. Some chips and beers.
Richard Taylor:
[00:37:10 – 00:37:20]
I would. Yeah, that sounds great, mate. Honestly, I’d love to do that. So you, you’re in Spain, you’re about to sail across to France, everyone. That sounds pretty damn cool going across.
Brian:
[00:37:20 – 00:37:27]
The Gulf de Lyon, which is. Can be quite hectic. So I’ll pop open the beer on the other side.
Richard Taylor:
[00:37:28 – 00:37:34]
Okay, well, good luck. Godspeed. What’s the sailing terminology for that? Is there a sailing bon voyage?
Brian:
[00:37:34 – 00:37:37]
Well, that’d be the French one, but that’s just in general.
Richard Taylor:
[00:37:37 – 00:37:40]
Okay, I’m standing by it. All right. Bon voyage.
Brian:
[00:37:40 – 00:37:42]
Happy sails to you.
Richard Taylor:
[00:37:43 – 00:37:51]
Okay, Ryan, well, listen, have a good journey and have fun in Brazil and do some good work and I’ll see you next time.
Brian:
[00:37:52 – 00:37:53]
Looking forward to it. Thanks, Richard.
Richard Taylor:
[00:37:53 – 00:38:53]
All right, mate. Bye bye. All right, folks, that’s another episode of Expat wealth under our belts. Thank you for listening. I appreciate it. And I appreciate you. If you’re enjoying the show and would like to support the mission, which is to help ambitious expats thrive in America and ask you to subscribe to the POD wherever you listen and also consider leaving a rating and review, this stuff really does matter. Please help us get this information, information to the people who need it, that is. To your fellow expats. Just a quick reminder that this show is brought to you by Plan First Wealth. We are a U S. Based financial planner and wealth manager and we help successful American and international families living across the US to make the most of their opportunity and ultimately to retire happier. If you’d like to know more about how we might be able to help you, you can find us on our website, www.planfirstwealth.com or you can look me up on LinkedIn. Do get in touch. We’d love to hear from you. As always, thank you to the podcast guys for their help producing this episode and the entire show. See you next week.
Production