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Michael Sonnenfeldt: Invest in Public Equities, Real Estate, and Private Equity - YouTube
Channel: CNBC Television
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do you believe them michael this morning
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a city group telling their clients that
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u.s equities are maybe not the place to
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be and by the way they think china
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outperforms the u.s in this kind of
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environment
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great to be here nice to see you uh well
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our members do about 73 of them uh think
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recession is likely uh our members tend
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to be conservative because there are
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people who have built great businesses
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and sold them and so they're now in a
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wealth preservation mode but they're
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well diversified and uh ready for
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whatever is going to come all right so
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if if that's the base if that's the base
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that you're drawing this information
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from and they are conservative what
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exactly are they doing i mean this is an
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inflationary environment these are
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people who understand that cash being
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held on the sidelines is continuously
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losing buying power
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what exactly do you do in an environment
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where bonds are uncertain equities are
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uncertain and everything else in
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cryptocurrencies is uncertain as well
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sure so our members tend to be long-term
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investors and they have some themes the
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crypto obviously is very concerning but
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for the portion of our members that are
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invested in crypto they see this as a
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buying opportunity because they have a
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fundamental belief it's little like a
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tesla owner when tesla was one-tenth the
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price it is now it's come down off its
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highs but they've still made fortunes
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our main distribution is public equity
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and real estate are the two top areas
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real estate has always been king
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oddly enough in the first quarter uh
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public equities before the market fell
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became our largest asset my guess is by
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next quarter it'll fall below real
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estate again and then private equity
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which is a much longer term investment
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uh but those three private equity public
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equity and real estate add up to over 70
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percent that's a pretty long-term
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uh risk on confidence in our economy so
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it's true that they think there's
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recession in the near to mid-term
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but still long-term confidence and what
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you do is you have low fixed income
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historically low we've never had six
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percent it used to be around 12. that's
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a concern about inflation and interest
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rates and high cash
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our members run 11 12 cash so that
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they're not forced to liquidate
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precisely at the wrong time and they
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have enough dry power dry powder to make
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a bet when something really looks
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attractive yeah especially if you're if
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you're talking about some of these more
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illiquid investments like real estate or
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like private equity and hedge fund
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investments as well uh can i drift
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towards the real estate side of things
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you mentioned it's always kind of like
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the top of the heap there we know that
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the real estate market is red hot we
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know maybe your members are not dealing
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with the same kind of houses that maybe
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i'm dealing with right now in my
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neighborhood because they're ultra
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wealthy but is there a feeling there
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that that this is the top of the real
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estate cycle
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you know for real estate is not a
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monolith the difference between
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industrial residential retail office
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those are all different workforce
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housing in the right communities
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people are very interested in continuing
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to do that but prices are high uh retail
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obviously is uh going through now a
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second problem you just mentioned a
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whole bunch of retailers that are having
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a tough time obviously with the pandemic
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it was even worse uh and uh office is
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really the most amazing because there
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the question is has something
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fundamentally changed for a generation
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is the relationship between the worker
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and their office different well it's not
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in a factory but if you can work from
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home two or three days a week people are
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really re-conceiving the entire office
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so it's very much uh which is going to
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win and which is going to lose there
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will be winners and losers but over time
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real estate has been our best performing
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asset and since our members have made a
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lot of money in real estate they have
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deep expertise and there's huge
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opportunities you know when you have
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downturns like this uh if you if you
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didn't have cash you're going to be
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forced to liquidate but if you do have
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cash think of all the opportunities in
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the technology stocks that have been
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decimated that's in the public side uh
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even in the health care side and in the
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private markets uh you know there's a
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deal of a lifetime that passes your desk
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every week if you're able to look for it
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and seize the opportunity i mean we know
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that they're the the devil isn't the the
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details michael for a lot of these
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things but but as you kind of put your
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finger on the pulse of all of these
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members that are of ultra high net worth
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is there a part of that equities market
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that is more attractive is it those mega
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cap technology stocks the ones that have
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been the consensus buy
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arguably since the depths of the great
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financial crisis back in 2009 is it
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maybe some of the energy stocks that are
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kind of running away with things right
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now
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where exactly is the interest from a
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stock perspective in some of these more
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beaten down sectors perhaps i mean maybe
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not energy
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sure well technology has always been
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our number one sector that we're
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interested in so people who have
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expertise in technology particularly in
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the b2b technologies because the
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consumers have been beaten down a bit
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but where you have fundamental
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technologies that underlie large
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corporations there's some terrific
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opportunities there but our members are
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also looking for long-term themes and
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the climate you you mentioned energy
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energy is an all-time high but climate
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is a theme there's going to be five
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trillion dollars a year spent over the
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next decade and so
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things like renewable energy and
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rebuilding the grid even the copper
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that's going to be required to rebuild
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the grid these are long-term plays with
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tailwinds that are almost
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recession-proof that doesn't mean they
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won't go up and down in a recession it
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means over the long term there's just
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extraordinary value and and there's a
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lot of those areas and you mentioned
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some of them but technology healthcare
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these are places that really have uh you
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know if you cure cancer in a in a good
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time or bad you're going to make money
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all right and michael before we let you
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go one of the conversations i've had
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multiple times with folks who are older
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wiser and wealthier than i am is whether
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they should be continuing to invest in
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cryptocurrencies you alluded to it
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earlier on but a lot of folks are
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underwater right now including some of
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the wealthier investors that you talk to
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is there a sense right now that they
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want to continue investing in it because
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it's like the dollar cost averaging
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approach or is this a time to cut your
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losses and say hey you know what
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crypto's not for me i'm going to move on
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first of all you know our members are
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now all around the world but in a place
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like san francisco that thinks there's a
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recession because of the technology
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that's also where some of our biggest
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crypto buyers are and those really have
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a long-term commitment so for people who
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really have an understanding and a
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belief and i'd say that's five or ten
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percent of our members at most they're
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going to be really focusing on crypto
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opportunities but they're still going to
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have a prudent allocation it's like gold
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has historically been a one to three
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percent allocation of total portfolios
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and my guess is crypto is the same so uh
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there's some certain sentiments across
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our membership but uh different
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sentiments in different locations our
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groups in calgary thought we were in a
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recession because of energy
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a year or two ago and they're doing very
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well right now because of energy prices
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where it's just the opposite in san
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francisco where the recession is really
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hitting the technology companies but you
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have some real die hard crypto fans all
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across
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north america and most of them would say
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this is a buying opportunity
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