E60: Third Quarter 2025 Client Letter - The Coldplay Edition

Foreign. This podcast is brought to you by Ginsler Wealth. The information discussed today is meant to be general in nature and not tailored to your specific investing circumstances. This means that you should talk to your regular Gensler wealth advisor or your own advisor before acting on any information we discuss today. Nothing in this podcast is intended to be a solicitation, and past performance does not guarantee future returns. This podcast contains a lot of lyrics by Coldplay, so if you like Coldplay, get ready for an adventure of a lifetime. Oh, I just did it. Today on the Unlimited podcast, I share my 2025 third quarter client update where we discuss my experience at this summer's Coldplay concert and what I learned from their lead singer. Let's go Sam. Hey everybody. Welcome to the Unlimited Podcast. As you know, every quarter I like to read my quarterly letter for my clients for those who don't want to read but rather prefer the smooth sound of my voice. And speaking of smooth sound, this update is called the Coldplay Edition for the band Coldplay, and you'll see why. So here we go and let's get rolling. A warning sign. I missed the good part. Then I realized I started looking and the bubble burst. I started looking for excuses. That's lyrics from the song Warning Sign by Coldplay to Gensler Wells clients. First of all, don't read into the lyrics that I just mentioned that I think the markets are in a bubble and they're about to burst. I don't the lyrics pertain to my Coldplay story that I'm about to tell you. Second of all, this letter won't focus on the Coldplay affair controversy that was all over social media this summer. And third of all, I did attend the Coldplay concert in Toronto with my actual wife and I have pictures to prove it. And actually in the letter there's a picture of of the concert. And again, as always, there will be pictures, there will be graphs, there will be footnotes. Go to gimsowealth.com find the letter and you can see it. There's that Coldplay concert in early July was very good. A huge spectacle from a band that knows how to engage with the audience and put on a great big stadium show. But my favorite part, and the part this story pertains to, was at a more subdued acoustic part of the show. The band left the stage for a break and Coldplay's lead singer, Chris Martin, moved to the stage extension directly in the middle of the stadium floor and called an audience member up on stage after engaging with her over her nice sign. He told her that he would play any song she wanted. She selected Warning Sign. Those were the lyrics that I shared with you at the beginning. With just a piano on stage, Chris fumbled a little, noting that he was trying to remember how to play the song. And so the audience member then offered, I can choose something else if you want. And this was the best part. Chris said, no, this is my job. He asked for a guitar and then he played and sang the requested song on his own. He nailed it. No big spectacle, no big lights, no backing band. Just Chris doing his job. And it was done well. And listeners know that I like things done well or well done Doing Our Job As I reflected on Chris Martin doing his job, I got to thinking about what we are doing to do our job for you. This past quarter we focused our education efforts via this podcast and our investing analysis around AI. We saved our clients money again and we broadened our reach and strengthened our team. All for you. Call it magic. The AI theme again. My last quarterly letter touched on the topic of AI. Who isn't talking about AI these days? With that in mind, it is our job to not only talk about it, but to understand it, use it, and take action in your portfolios to capitalize on it. We also took it one step further this past quarter. We educated you about it as well. If you haven't done so already, I highly encourage you to listen to my interview with Jordan Jacobs, Managing Partner of Radical Ventures, perhaps the world's best AI focused venture capital firm. There is no person that I know that is better positioned to tell us what is happening and what might happen in the future as a result of AI. One of his boldest predictions is that within a few years, 90 to 95% of white collar workers will be performing their jobs with the help of an AI agent. If you don't know what that means again, please listen to the podcast episode. We believe Jordan is likely to be right and that IDC Research is likely directionally correct that investments in AI solutions and services could yield a global cumulative impact of $22 trillion by 2030. This past quarter, we focused significant time on how to best invest in and capture the upside of AI for certain clients. We have already invested in one or more of Radicle's venture funds. And again, just a quick reminder, lots of footnotes and endnotes and you can guess that for that one. It basically says it's not really applicable to all our clients, but take a look at those footnotes, endnotes, etc. We also looked at capitalizing on the energy infrastructure that will be needed to deliver and run AI. We sought out and reviewed a number of private and public infrastructure funds, exchange traded funds and companies. However, we have determined that private infrastructure comes at high cost and significant liquidity constraints and public options are currently trading at valuations that are too high in our view. As such, we have not made any investments in AI infrastructure yet, but we will keep looking. As a result, our current approach is to increase exposure to publicly traded companies we believe will benefit most from AI. Not just the Magnificent Seven, but also the other top 20s and P500 companies. These firms have the size, small scale, global reach and resources to either benefit from or empower the world with AI or both. Think Nvidia, which is powering the AI revolution with hardware. Microsoft and Google, which essentially power every business in the world. Apple, which together with with Google's Android empowers individuals via cell phones and other devices. Facebook, which has significant control over social media and messaging activity Tesla, the world's most technologically advanced auto and soon to be robotics company and Amazon, the world's largest retailer, which along with Microsoft provides cloud services to much of the business world. Outside of the Magnificent Seven, we find other world leaders like Berkshire Hathaway, which is a nice diversification actually relative to tech JP Morgan Chase, the largest bank in the U.S. walmart, Oracle, another AI cloud infrastructure leader, Visa, Mastercard, et cetera. You get the picture. It is well known that these top companies have dominated the market for the last 10 years and have contributed a dramatic proportion of the US market's earnings and return. In the letter there's a chart that highlights the share of the earnings for the end market cap of the top 10 companies in the S&P 500. I'll let you look at it online, but it obviously or not obviously, but it shows that they tend to have a much larger share of earnings and market cap than their numbers in terms of the number of companies that it is would suggest. As a result, many experts like to decry the concentration of the S&P 500 in these top names. We believe their dominance will continue. In fact, looking back 35 years, a consistent trend has been the outsized contribution of the largest companies to the market's overall earnings and market capitalization, which I just explained to you and is in the chart as such for many clients where appropriate. Of course, we have focused more of your equity allocation in the top 20s and P500 companies. It is our job to try to position portfolios to capture future gains. We won't always be right. But that's why we diversify. If you never try, you'll never know. Generating More Risk Free Return as we've discussed in prior letters, our job is to find risk free return for clients wherever and whenever possible. Risk free return can come in the form of negotiating lower fees and or expenses. This past quarter we negotiated fees and expenses with two managers. In the first instance, we successfully convinced the manager to allow all our clients that hold their fund to to switch to their institutional class, which has a management fee that is 0.35% lower than the class we were in. This required significant back and forth and then careful work by our investment and operations teams to ensure a smooth transition. But we love saving our clients money or phrase differently. We love Getting our clients 0.35% higher returns with zero additional risk to taken. This is our job. As for the second manager, as part of our due diligence process, we always dig deep to understand the full cost of investing not just their management fees, but also any expenses borne by the fund under review. In this case, we believe the expenses being charged to the fund were too high. After much discussion, the manager agreed to cap the expenses and fund any excess above the cap that themselves Our actions could save unitholders in excess of 1% a year. I am especially pleased by this outcome because our efforts benefit not only our clients, but also all investors in the fund thanks to our advocacy. Frankly, I'm surprised that every other advisor that has put their clients into that fund did not raise the same issue for the benefit of their clients. This is our job. You are my universe and I just want to put you first. Broadening our firm's reach and team for your benefit, we continue to broaden our firm's reach, systems, tools and team. Over the past year and past quarter, we became licensed to serve clients more broadly across Canada, including Quebec, British Columbia and Alberta. In addition, we are currently taking steps to become a Registered Investment advisor with the U.S. securities and Exchange Commission, the SEC. As we know, some of our clients wish to eventually move to the US and or have US Investing needs. I'm also pleased to announce the addition of Gila OSIP to our team as Family Office Advisor. Our practice of assisting families with their overall financial needs, what we call Family Office Services, continues to grow and I'm confident that Gila's CPA CA background, that's an accounting designation and and entrepreneurial experience, will be of great assistance. Finally, as mentioned last quarter, we launched our new client portal earlier this year. Some of you have not yet activated your portal access. We believe the new portal experience is fantastic and gently encourage you to activate and log in at your convenience. Should you wish to have a member of our team assist you in this endeavor, please don't hesitate to reach out. Nobody said it was easy. Oh, take me back to the start the Benefit of Independence to do our jobs well, we also need to be learning from our peers and become aware of new technology and tools to serve you better. In early September, I attended a large independent Advisor conference in California where I did just that as the US is often many years ahead of Canada. I also participated in a panel discussion on the benefits of independence for advisors and their clients and if you go online, you can see a link to an article that was written about that panel. There is a clear trend of advisors wishing to go independent, but is increasingly rare in Canada to do what I did in 2021 launch a new completely independent investment or wealth management firm from scratch. The regulatory, compliance, operations and technology burdens are not easy to manage. Frankly, I'm glad it's hard to say it again. Nobody said it was easy. There remain few fully founder owned or partner owned independent wealth management firms in Canada. We like being one of the few. This allows us to do our job with a singular, unwavering focus on doing what is best for our clients. Our firm's main colors are black and yellow, chosen because I'm partially colorblind and those two colors are very clear to me. So it seems appropriate to end a letter focused on launching my independent firm and doing our job for you as follows, perhaps with Coldplay's most famous song I Came Along. I wrote a song for you and all the things you do and it was called Yellow Yellow by Coldplay. There's a nice picture of the stadium during Coldplay singing of that song. All the lights are yellow, all the crowd is lit up in yellow. Thank you for your continued trust, support and confidence. We are available 247 should you need us. Sincerely, me, Brian Gensler, President and CEO all right, so that was my third quarter 2025 update for clients. We've got a couple great podcast guests coming up. We have a little bit of a twist as well, which I'll leave it at that, which will be in the next month or two, depending when we schedule it. And stay tuned. All the best for the fall and we'll talk to you soon. Bye bye.

The unlimited podcast is hosted and produced by Brian Ginsler and is edited and mixed by myself, David McMillan. This podcast is not to be taken as investment advice. If you like what you heard. Don't forget to rate the podcast and follow us on social media. Inslerwealth thanks for listening and see you next time.