HEDGE FUND INVESTMENTS WITH JIM SOGOTIS | E051 PODCAST

LISTEN TO THIS EPISODE

ABOUT THE GUEST

Jim Sogotis is a seasoned investment professional with over 25 years of experience in the financial industry. He has held significant roles, including serving as an institutional trader for Merrill Lynch and leading the trading division of a San Francisco-based asset management firm overseeing more than $1 billion in assets. Additionally, Sogotis has managed portfolios for hedge funds, achieving returns exceeding 40%.

Currently, he is the General Partner at Ploutos Capital, a firm specializing in alternative investment strategies for sophisticated investors. Ploutos Capital emphasizes flexibility in investment choices, active risk management, and a unique method of stock analysis to identify high-potential opportunities.

Beyond his professional endeavors, Jim Sogotis has been involved in community events, such as being honored at a champagne brunch hosted by the Annunciation Greek Orthodox Cathedral in San Francisco in June 2019.

Jim’s Website:
https://www.ploutoscap.com/

Jim’s LinkedIn:
https://www.linkedin.com/in/jim-sogotis-5688b19/

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“We don’t look at political sides—we look at what’s in front of us and make decisions that help our clients grow. That’s our responsibility.”
— Jim Sogotis

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The Invigorate Your Business with George Stroumboulis podcast features casual conversations and personal interviews with business leaders in their respective fields of expertise. Crossing several industry types and personal backgrounds, George sits down with inspiring people to discuss their business, how they got into that business, their path to the top of their game and the trials and tribulations experienced along the way. We want you to get inspired, motivated, and then apply any advice to your personal and professional lives. If there is at least one piece of advice that resonates with you after listening, then this podcast is a success. New episodes weekly. Stream our show on Spotify, YouTube, Apple, Amazon and all other platforms.

ABOUT GEORGE STROUMBOULIS

George Stroumboulis is an entrepreneur to the core, having launched several ventures across multiple industries and international markets. He has held senior-level positions at progressive companies and government institutions, both domestically and internationally, building an extensive portfolio of business know-how over the years and driving profit-generating results. George’s ability to drive real change has landed him in several media outlets, including the front page of the Wall Street Journal. George was born in Toronto, Canada to his Greek immigrant parents. Family first. Flying over 300,000 miles a year around the world puts into perspective how important family is to George’s mental and emotional development. With all this travel to global destinations, the longest he stays even in the most far-out destination is 3 days or less - a personal rule he lives by to make sure he is present and involved in family life with his wife and three daughters. To read about George’s global travels, stay connected with his blog section.

FULL SHOW TRANSCRIPT

George Stroumboulis: 0:00

Welcome to another episode of Invigorate your Business with George Stroumboulis. Today, I sit down with Jim Sagotis. Jim is an expert in the financial investment arena. Jim's going to break down how we should better invest our money, what the new presidency means for the economy here in the United States, tips on how to better approach your investments and get the best returns, and just general advice that we're going to talk about. So enjoy this episode starting now. My name is George Strombolis and I'm extremely passionate about traveling the world, meeting new people and learning about new businesses. Join me as I sit down with other entrepreneurs to learn about their journeys. This episode of Invigorate your Business starts now, so we're going to roll into this. I have a guest today from Northern California, San Francisco, Jim Sogotis. Thank you for coming down and joining me.

Jim Sogotis: 1:00

Thank you for having me.

George Stroumboulis: 1:01

Appreciate it. We're going to share with everyone listening today just your background, but you are a financial expert. You are in the space of investments, trades, stocks, funds, all that stuff. You have been on the buy side, the sell side, everything in between the large agencies, banks, everything. You recently launched your own fund called Plutos, which we're going to talk about. But I think, for the listeners today, we're going to learn a lot just about investment here in the United States how to maximize your returns, how to deal with volatility in the markets, how to deal with new presidents and leaving presidents and how that affects the market. So thank you for sitting down with me today.

Jim Sogotis: 1:40

My pleasure. I really appreciate you having me.

George Stroumboulis: 1:42

Absolutely so. Talk to me in the audience. How would you describe who is Jim Sagotis?

Jim Sogotis: 1:55

Well, Jim Sagotis has been in the financial industry for 25 plus years on what we call the sell side. I started on the sell side where I worked for a brokerage firm, started out actually in the municipal bond area, and from there I moved over to the equity department and I was a trader. I was what's called a sales trader. I was the liaison between the floor traders in New York and the clients.

George Stroumboulis: 2:18

Oh, here in California.

Jim Sogotis: 2:20

Yeah, mostly in California. So when a client wanted to buy stock from Merrill Lynch, they would call me and then I would call the floor trader and the trader or position trader and then that's how the transaction would happen. I would call up. You would call me and say I want to buy 50,000 IBM at the market. Fine, I would be on the phone with the position trader in New York and said George wants to buy 50,000 IBM at the market. Tell George he just bought 50,000 shares at X dollar price and we're done. You'd be on the other line. I'd have two phones to my ears. You'd be on the other line. I said George, you just bought 50,000 at this price.

Jim Sogotis: 3:05

Just like that Just like that.

George Stroumboulis: 3:06

Versus today, where it's just electronic instant right.

Jim Sogotis: 3:10

So that's what it used to be like, and the nice thing about that is you get instantaneous. You're not going through a system, you're talking to someone that has the ability to do that trade. So that's how it gets done on that level. Today, you get a lot of people that are using the electronic thing, and you hear about what they do. They want to be close to the trunk line so that their trades go through faster. Well, that's yes or no, but. But what happens is you still get fast transactions, given that you're in the wholesale equity business versus the retail business.

George Stroumboulis: 3:53

Right, and when you started were you born and raised in San Francisco.

Jim Sogotis: 3:57

Born and raised in San Francisco, worked for my father for many, many years and ended up going back to college and seeing that there's. You know, I always had that thing, that always that rush, that of being in the stock market, right, and that's how I got into it. And it just walked in, got a job and started doing what they told me to do.

George Stroumboulis: 4:21

In the Bay Area.

Jim Sogotis: 4:22

This is where you stayed most of your career Most of my career I did spend three years in Arizona where I was in the municipal bond business. Okay, and I helped a lot of people in that area buying bonds because bonds are the most safest Municipal bonds are the safest investment you can go into because they're backed by something and so you get a return. Your money's safe. They're very vanilla and they're good. They're near and dear to my heart. But when I was a young guy I wanted the action, so that's why I got into the equity side.

George Stroumboulis: 5:00

So I think a lot of our listeners are in financial. They'll understand everything you're saying. A lot of them are not, so I do want to kind of break it down. When you're looking at just different investments, right Different makeups of places to put your money in as an individual type investor, what are the options? So you just listed vanilla bonds, right. What options do people have?

Jim Sogotis: 5:20

Well, I mean, there's a whole gamut, the way that it is today. Mutual funds, which include index funds, are always good investments. You can go into the equity markets and buy stocks of companies you may want to buy and own, but you have to know, you have to do your research. I was taught that there is a pyramid To buying stocks. There's a pyramid At the base of the pyramid. You buy the stocks that are stable, that have decent returns, and you want to own those popular names. As you go up the pyramid, you slice that up and then you start getting a little more risk and you add the risk into your portfolio and those names again. Your second tier could be technology today. Your third tier could be some of the stuff that's out there now like AI, enterprise software, icloud type stuff. And then at the top is you, your is your gamble, you know your your throwaway money, if you will.

George Stroumboulis: 6:29

So what would you say? Is like a throwaway money type of industry, or is it? Is it like crypto?

Jim Sogotis: 6:35

or, to be honest with you, I don't. I I'm not a crypto fan. Okay, and the reason I'm not a crypto fan is because there's no backstop to crypto. Yeah, it's me telling you, I'm going to pay you if I have it, if I don't have it, and I'm giving you crypto, which is a made up value.

George Stroumboulis: 7:01

I'm with you and I've done something in the past in the crypto arena and I've lost money and I'm like, okay, you know, I just got in there, put enough in there that if I lost it I wouldn't see On my flight. I just got back this morning from Greece. On my flight back I watched a documentary on what's called the crypto queen and all had to do with the one coin and it was basically a Ponzi scheme and everyone. But yeah, so you see all that. You see that it's backed with the blockchain and they explain the logic. But even then, for myself, it's just, it doesn't feel tangible for me.

Jim Sogotis: 7:32

Well, you know again it's, it's. It's a third market type currency where it's backed by what people say they will do. It's not backed like when you say you're buying something that's backed by the US government. You know you're buying the best credit in the world, so you know there's a backstop there. If anything happens, you know that you're going to get your money back.

George Stroumboulis: 8:00

Right.

Jim Sogotis: 8:01

Whereas in crypto I mean, you know they come up, the numbers on that have gone up dramatically. You know they come up, the numbers on that have gone up dramatically. You know the value of it. And again it's me telling you that I'll give you. Instead of someone saying I'll give you 20,000, you know I say, well, I'll give you 40,000, but okay, there's nothing there. There's no real basis for that, for you to say it's not like real dollars coming out of your pocket.

George Stroumboulis: 8:27

Right. So when you're looking at your pyramid and the way you approach financing and investments, is most of your makeup from the study.

Jim Sogotis: 8:36

I like in our funds. What we like to do is we like to have good, solid names that have growth opportunities, the technology things that we do. We like to buy names that have growth opportunities, the technology things that we do. We like to buy names that are recognizable but also have some oomph behind them. As you move up the ladder up the pyramid, we get out a little more with names that maybe have had a lot of volatility, that have gone back and forth and and again. Through our research we determine whether they're worth putting money back into or not, and then again, for us there is no throwaway money. We I mean that's, that's a. The pyramid that I was talking about is more of a retail investors concept. We don't invoke those kinds of things. We try to stay in what we believe will be names that are doing good things, names that will grow medical stocks that are coming out with some amazing new technologies. The medical industry will change in the next five years. The medical industry will be completely different than it is today.

George Stroumboulis: 9:57

How so? Based on AI.

Jim Sogotis: 9:59

Based on a lot of AI. I think a lot of what they're going to be doing is they're going to be a new way of being able to look at you and determine what's wrong with you. They're going to map your DNA and you're going to go into your doctor and your doctor's going to say well, what's wrong with you today? You could go walk in with pneumonia and they'll feed your DNA into a computer model. In that model they can add and subtract different medicines and to see how your DNA reacts to that, and then from there they can determine what you actually need.

George Stroumboulis: 10:50

From that virtual model basically model and a lot of this exists today, but it's so price prohibitive for the masses, right? So you know, government officials, diplomats, C-level executives they're spending 50, 60 grand for these body scans where your average person can't afford that, Right? So is it going to shift more towards that, based on your research.

Jim Sogotis: 11:12

I do believe that that's you know insurance companies are going to. You know, start looking at these things and start realizing that you know this is cost effective and it actually helps the patient. Patient, because what you'll end up getting is medicine in a patch. You put the patch on, you don't have to take pills, you won't have to remember every four hours, you won't have bottles of pills to take, it'll be fed to you through the patch and you should get better.

George Stroumboulis: 11:43

That's incredible. So you're, you're, when you're looking at this. You know for the viewers you didn't just enter the space. You have decades behind you of experience and market ups and downs, and just this experience on on where to properly invest money and get the right returns right. Talk to me just about that progression, and then I also want to talk about typical returns.

Jim Sogotis: 12:04

So that progression happened because you know you. You learn when you're, when you're at a company like Merrill Lynch. You learn to know the names that you're talking about, because you're going to have clients that are going to call and ask and you have to be able to direct them to the right people that have the real knowledge. But you have to have a basic knowledge of what you're talking about and so when we get from there, you start to find your niche and you start to find things that are exciting to you and you do the research. You spend your time doing the research, understanding what you're trying to convey to someone else, and you find that the information that you're giving is good information, right, and then from there you know. As the progression goes, I went from the sell side to the buy side, where we were doing more in-depth research, and it's really fascinating stuff. When you start, look, it's boring. It can be boring reading and understanding that, but when you start reading and really understanding that, it's fascinating stuff.

George Stroumboulis: 13:19

So that transition from the sell side to the buy side just define. What does that exactly mean?

Jim Sogotis: 13:25

So when you're on the sell side, you work for a financial institution, a bank, a brokerage firm, a trading company. When you move to the sell side I'm sorry, to the buy side you become a client. Okay, you're a client of all of these firms and you have to. You're because you're representing your clients, right? People who have given you money to, to make them money, to build their portfolio so you have your own private fund on this side.

George Stroumboulis: 13:56

You're the one going out now to the banks to to buy the stocks, to buy the different mutual funds right.

Jim Sogotis: 14:01

We go out and again through our analysis, we determine what is worthy to buy and put in the portfolio and we buy them from brokerage firms right.

George Stroumboulis: 14:12

So talk to me about plutos capital right. This is your, your fund it's a new fund.

Jim Sogotis: 14:18

Uh, I've always been in the background. I've always, uh, uh, tried to to maintain my presence as someone that people could call and talk to. Now we've come out and realized that there are a lot of people that just don't know and, if I can say this, a lot of Greek people that are not aware of what exactly happens in the markets or how they can be treated properly, right, and that's why we're out now doing this new fund. We're actually doing two funds. One is the actual long short hedge fund, if you will, which will have a greater return because of the ability to short. The other is just an investment fund that has a long bias. We want the market to go up. There are a couple of things that we can do in that fund to help enhance the returns on that, but those are the.

George Stroumboulis: 15:19

You know, we want to have two funds that will mirror each other, but we'll also have, uh, you know, good returns okay, so a lot of us when you hear, like the different funds and the different strategies, so two funds, one of them is a hedge fund, that's essentially a long, short or short, long, right, okay, uh, define that for us well.

Jim Sogotis: 15:40

So a long short fund is a fund that you can go again either way. You could buy long. You can sell against the market if you so choose. That fund you have to have, you have to qualify for to be in a fund like that, and to qualify you have to have a net worth of over a million dollars, excluding your home.

George Stroumboulis: 16:07

Excluding your home. So to get in there it's better returns.

Jim Sogotis: 16:11

Better returns you have. You know, sometimes hedge funds get a bad name because they're fast money, so to speak. But when you have, when you employ a strategy like we do, where we're long biased but we use the short to enhance our portfolio returns, then you can get a good return, good, solid return on a consistent basis from that.

George Stroumboulis: 16:36

Yeah, I used to live in Connecticut when I first moved to the States in Stanford and our office was in Greenwich, and my old business partner, slash boss at the time with the startup he studied finance. All his buddies were hedge funds, hedge fund managers in the area Like it's very concentrated in that area. And at the time it was like that it's fast money, big money, it's just another world. Okay, so you have this fund and then you have the other private, individual type investment fund, right? What does that look like?

Jim Sogotis: 17:08

So that will mirror the hedge fund in the long category. That's a fund that is only we're only buying for it the legal parameters of the investment fund itself, Gotcha.

George Stroumboulis: 17:36

So what are typical returns Like? Over the 30 years you've been in this right Like I know it's hard right and we're not pegging. But I've always heard oh, you put it in just the bank, you get a few points, you put it in some stock that's very stable. You know these blue chip type stocks and you can make six 7% a year. And then you start hearing into the other ones where it's double digits and all this like what's a good strategy for someone to go in at this and and what should they expect from rates?

Jim Sogotis: 18:15

Depending on who you're talking to, what they do, how they invest their money, what their philosophy is there's no reason you can't make 20% on a yearly return, really and better.

George Stroumboulis: 18:27

And better, that's better. Obviously, some years will be better, some years will be worse, but you're saying on average, if you're doing that, you should see at least 20%.

Jim Sogotis: 18:34

Well, again having the opportunity to hedge where you have the long bias, where you have stocks that are going up and you you're gonna have a lot of those you see that in the market today but you're also gonna have stocks that go down, and in a hedge fund or a long short fund, you have the ability to take advantage of that short side where on the other fund you don't have the short capability, you only have the long fund that's going higher. So we try to offer our clients all the opportunities. If you're not really open to some of the volatility that's in the hedge fund, that's fine. You can go into the other fund and you know you can sleep at night.

George Stroumboulis: 19:32

You can sleep at night.

Jim Sogotis: 19:33

And again are there any minimums to try to get into a fund like that where it's worthy of the returns. Well, again, you know it depends on the manager. You know a lot of the way they do things today. You know they're asking for, on a regular investment fund, you know, $100,000 to go in On a hedge fund. They ask for significantly more only because the returns are higher. I mean you're asking for $200,000 to $250,000 for those funds, for those funds.

George Stroumboulis: 20:01

Over the years we've had, you know, crashes in the market, right, you've seen a few big gains and big crashes in your time During those crashes. How do you manage to survive that, because there's firms that have gone out of business during this? How have you survived with your strategies? So, again.

Jim Sogotis: 20:21

we do a lot of research, we look out six to nine months what's going to happen in six to nine months, not what's happening today. And we're also contrarians. So when the market is doing one thing, we're looking for it to do something else. So if we see if the forecast for us is, if we see if the forecast for us is hey, the market is overbought, something's going to happen.

Jim Sogotis: 20:51

you know, God forbid a war. You know, those types of things make the market take a hit. Well, we're out there. We see that we have the information that comes back that tells us this could be happening. So, on the long short fund, we start going short, our portfolio mix starts to change and we start going more short than we are long and you end up actually doing well.

George Stroumboulis: 21:17

So can you explain if the listeners haven't seen the movie the Big Short, it's worth seeing right, Just to get an idea. Yeah, but can you define what it means to go short on a stock?

Jim Sogotis: 21:26

So when you go short on a stock, you're selling the stock in anticipation of it going down.

George Stroumboulis: 21:36

So it's tanking business is doing poorly. You're betting on that, yeah.

Jim Sogotis: 21:40

And it's just the flip side of a stock going up. But you have the law requires that you have more protection going when, if you're going short, ok so, and you can't just, you can't just be an individual and and try to say, well, I want to short this or I want to short that, because there are significant financial requirements to that to do that?

George Stroumboulis: 22:09

to do that, can you share any examples of stocks that you've shorted over the years that have done extremely well for you and your firm?

Jim Sogotis: 22:16

Well, one of the ones that I well two, two names that we did very well on, one of them was Circuit City.

George Stroumboulis: 22:24

Big brands.

Jim Sogotis: 22:25

Yeah, I mean, it was a big box store and the management was not doing the things that they were supposed to do to stay competitive and they just started losing business and we rode that stock all the way down to zero, jeez, and so that was. We owned a significant amount of shares there and uh, it went. Uh, it went to zero, and it was just. I mean it was. It was sad in that a good name ended up going bad and and it went down to zero, right, but uh, you know, that's the way it goes. The other one that we did very well on was lehman brothers. Oh, wow, okay, because, again, being in the business, we were seeing what lehman, but that's the way it goes. The other one that we did very well on was Lehman Brothers. Oh, wow, okay, because, again, being in the business, we were seeing what Lehman was doing and what their exposure was in the marketplace, and there was just no way they could come back.

George Stroumboulis: 23:18

And was that tied to the housing market? Lehman Brothers, that's where. Yeah.

Jim Sogotis: 23:23

And all of those things that happened back then. There was just, you know, it was financially impossible for them to make a comeback and so they, you know, they went and, just like Drexel Burnham, did the same thing. We didn't own as much Drexel Burnham or didn't short as much Drexel Burnham, but we did a significant amount of Lehman Brothers.

George Stroumboulis: 23:47

And Lehman remind me. So the housing crash was 2010,. Essentially. So what did it mean to short stocks then towards the housing market?

Jim Sogotis: 23:58

Well, you were shorting a lot of stocks that were, you know we shorted banks. We shorted a number of mid-level banks that were, you know, that were that you know we shorted banks. We shorted a number of mid-level banks that were, you know, that were in the 25 to 30 range, that went down to four dollars, right, and then the uh, the the fed came out and said well, you know, in order to support those banks they were, they opened up what they call the fed window and banks, basically were borrowing directly from the government. Right Now, the whole housing thing was, for example, you walked into a bank and you said I want a home loan and they said, ok, well, what are you buying?

Jim Sogotis: 24:39

I'm buying a half a million dollar home and you had excellent credit, you had the money to put down on the bank, on the loan and everything, but they wouldn't give you the loan. The reason they wouldn't give you the loan is, you know, and my analogy is, when you buy a car and you take it off, a new car, and you take it off the lot, it's worth 20% less. Well, it was the same thing in the mortgage in the home industry. You bought a home and because of the way the government said you had companies had to mark to the market that home was now worth $300,000. So if they gave you a loan for $500,000, you were, you know, two days later the property was only worth 300,000. So now they had to carry that. All those losses had to be carried on the books and they I mean it, just the losses were just astronomical.

George Stroumboulis: 25:37

Across millions of homes, millions of mortgages.

Jim Sogotis: 25:39

Yeah, it added up Very fast.

George Stroumboulis: 25:42

The biggest scene that just sticks out with me in the big short was they're at a strip club and the strippers explaining to the one guy that she's on her fourth home Right and she only made this much, and how she was able to just get mortgage after mortgage and it collapsed. So that was 2010. Now we're entering 2025. New president, president Trump, was elected. He's going to be the president by the time this airs Right. So not trying to get into politics, but just someone like a Donald Trump coming into office. Already we've seen the market gain over a trillion dollars right In activity. What does this mean for investors, from your outlook and what you've seen over presidents in the past like is this a good thing? Is that going to help the economy?

Jim Sogotis: 26:25

Well, I believe, no matter what they tell you, wall Street likes Donald Trump. Ok, wall Street has always made money when Trump was involved. I do believe the markets will go up. I do believe that you're going to have a lot more real growth versus hyped up growth, and I do think that there's going to be a significant opportunity coming for people to say, ok, you know what it makes sense. Now, I can, I can get in and I can. You know, and I can, my money will grow.

George Stroumboulis: 27:02

Right here in the States. Internationally you're seeing a lot of countries just freaked out with like trade coming with the European Union. I'm seeing a lot of the leaders there are scared because now there's going to be tariffs imposed.

Jim Sogotis: 27:14

I don't know if he's going to impose tariffs. I mean, I think that was just something he wanted to use to. I mean I think that was more of a political thing than anything else. I don't. You know, tariffs are not good. I mean, all again, richard nixon put tariffs on the japanese cars that came into the country and all of a sudden they just the prices just went up to the, to what the tariffs were, and it they never really work right, yeah, and there a even on the stuff we make my lighting company.

George Stroumboulis: 27:47

We import a lot of our stuff from Asia, right, and we're still paying. Well over 30% tariffs that were imposed from Trump didn't get removed in the following administration and you know, we just absorb it, we pass it along Like it's. It's just a, it's just chain reaction and you're like we're not really solving anything. I understand the intent. I'm wanting to bring manufacturing back home and that's not a bad thing, right. But yeah, I think the economy already you're just seeing where it's going and if people feel good, hopefully we can kind of get out of this mess.

Jim Sogotis: 28:20

Well, I do believe that you'll see a lot of companies come back to America Again. Before Trump, there were American companies had a tremendous amount and I read somewhere in excess of $500 billion in foreign banks and they never wanted to bring it back because the taxes on that money was 50 percent. So Trump came in and he lowered that and I mean that was one good thing that the guy did. He lowered that number and so people started all these four American corporations started bring bringing all their foreign cash back into the United States and that and that did help the economy because then they could subsidize their manufacturing and growth here in this country Absolutely, and that makes sense.

George Stroumboulis: 29:14

Yeah, I would love to see the next four years without any. You know global pandemics, covid's right, and just see. You know what we can do as a country here. You know the States is resilient, and I guess the key takeaway for me is I don't care what side of the aisle you're on, like it's one country, it's America. Can we just get behind and realize that we just we need to do better than what we've done?

Jim Sogotis: 29:36

Well, I agree with that and you know, and as a, as an asset manager, we don't look at, you know, political stuff. I mean we have to, we have to take what's in front of us and work with that.

George Stroumboulis: 29:50

So whichever.

Jim Sogotis: 29:51

Whichever party is is is in we you know we try to take the guesswork out of what they're going to do so that we can make our decisions that will eventually help our clients.

George Stroumboulis: 30:01

Totally so. Uh, the summer we were on our way to Europe with my family got diverted into San Francisco plane issues and we ended up staying a few days and going to San Francisco over the years in the past. I used to love it Like such a beautiful, should be top five cities in the world with its beauty and its culture, and it has everything. What's happened with San Francisco?

Jim Sogotis: 30:28

has everything. What's happened with San Francisco? Tough it's been, it's been, it's been a long haul. San Francisco was always a fun place to come. It was always clean, it was. You know people are friendly and and you know you just enjoyed being there. With everything that's happened in the last three to four years, it's just been hard as a native San Franciscan to see what has come. And again, I think a lot of it's political, and San Francisco is known as being a liberal city. That goes without question. Sure, but even the liberal population in San Francisco is frustrated with what's happening because the drug use, I mean our Greek church, is located in an area that's teetering.

George Stroumboulis: 31:22

In San Fran proper yeah.

Jim Sogotis: 31:23

Okay, and it's in the uh mission mission, uh, uh area, yep, and uh, it it's uh. I mean, you see people walking down the street and they just, you know, if they need to relieve themselves, they just go up to a wall. Yeah, yeah, and our church has had its spray painted, you know, because it has nice outside, the outside has nice marble. So they look at that and they, you know, they'll spray paint obscene things. What's the church name? Annunciation Cathedral.

George Stroumboulis: 32:00

Cathedral. Okay, we Googled because when we were leaving our engines blew on the airplane and we had to do an emergency landing Sacramento, then go back to San Fran. And when we went back we were just trying to Google San Fran, a Greek church to go and light a candle, and just thank God we didn't die and I remember it wasn't open at the time. There, yeah, san Francisco it's like it's walking zombies. I don't again politically remove that aside. This is just not okay for any city in the world. We're in America, right, right, and San Francisco is like such a nice, beautiful city. It's a beautiful city and it's just. You know, you go down to the Tenderloins and literally at nighttime there's hundreds of people just shooting up in the streets. You see it. And I think out of all this, the most frustrating thing is you know, a Chinese president visits Xi Jinping. Earlier this year it was late last year and for his visit the city was spotless for that area for that weekend.

Jim Sogotis: 32:55

They came in and they washed down all the streets. They moved all the homeless, all the drug addicts to different parts of the city, caged it up, made it perfect. And I mean, yeah, it was you know. Again, seeing that was like, wow, this is what I grew up with.

George Stroumboulis: 33:11

Yes.

Jim Sogotis: 33:12

And it was nice to see, but it was short-lived.

George Stroumboulis: 33:15

Right, but I guess that's what's frustrating. You know, are they going to do that with LA now, with the Olympics coming?

Jim Sogotis: 33:21

Right, they're going to have to.

George Stroumboulis: 33:23

Yeah, and they're able to clean it up. Obviously there's programs and there's clearly a problem with drug use and homeless right, like there's clearly a problem and that's a big issue. I don't know the solution, we got to figure that out. But when you just kind of let it happen and let it run over the city, it's just, it's a shame and most of it is politically driven.

Jim Sogotis: 33:40

It's like come on let's, let's clean this up. Well, you know, and that's the sad thing about it, because in the end, the people of San Francisco are the ones that are paying the tab, yes, and, and I mean, and we get a bad connotation, Now our is getting, you know it, and it isn't a bad place, right, it really isn't. I mean, there are, there are sites and there are sounds, and, and there are restaurants and, and you can just go up and enjoy yourself, and people are shifting where they're going to some of the older areas in the city that are a lot safer to walk at night. Absolutely, and it's you know, and because in the Tenderloin you can't, I mean I won't even drive in the Tenderloin at night. I mean, and I'm from San Francisco.

George Stroumboulis: 34:32

Yeah, and you're from there.

Jim Sogotis: 34:33

I mean, I've seen people, I've seen people with guns, you know, just walking down the street casually, and the police, you know, just they can't do anything about it.

George Stroumboulis: 34:45

Well, especially when you're chanting, defund them too, when these poor people are trying to do their job. That's a whole other political. So talk to me part of that right, like all this COVID, inflation where we're at with inflation. You're a financial expert. How do we manage this? How do we bring the inflation number down and get back to normalcy?

Jim Sogotis: 35:04

So the things that you have to do, really, if you cut spending, if you allocate your resources to areas of need instead of just funding everything, because all they're doing is printing money, right, the government is just printing money to keep funding everything in and that creates inflation and because of that you're you it just keeps going up. It'll just keep going up. Now, hopefully, that's going to change and we have the Fed is going to be coming out next week in anticipation of a. You know, people are saying there's going to be Well because of the new regime that's coming into Washington. They they're estimating that it's going to be rate cut again, which again will be good for the economy.

George Stroumboulis: 36:06

Absolutely, and that's what we need to rein in inflation. Yeah, absolutely, jim. Talk to me on over the years like how do you find new investors? You've had investors and we've talked offline net worth, you know hundreds of millions of dollars, right. And how do you go and seek the right type of investor to come into your fund? Because you're not opening it up to just anyone you want to be selective, right?

Jim Sogotis: 36:24

Well, the funny thing about it is there are a lot of people that want to get into hedge funds. If you want to get into a hedge fund, you need to be able to sit down with the manager and ask them important questions about what they do, how they do it, what tools do they utilize? What is your requirement? Can you actually afford to? You know people like saying well, I'm in a hedge fund, you know, and they do that because of they want to say that they're in a hedge fund.

George Stroumboulis: 36:58

It's got this thing to it right.

Jim Sogotis: 37:03

But the reality is, you want to have people that you can actually trust, because you're giving them your money Right, and so you want to be able to trust them. You want to know what kind of investment history they have able to trust them. You want to know what kind of investment history they have, their backgrounds, where they've been, who they've worked with, how they do their job. Those are the things that are the most important to learn from potentially going into a hedge fund.

George Stroumboulis: 37:35

Right. I'm just curious right now when did, like, shorting a stock become a thing? Like what year? Because when you look at it you're like I understand, it's legal, it's the market you could do. But it's kind of morbid in a way that you're betting on the failure of a company, of an economy, right, right Again I think it was Trump and Clinton in a debate she was attacking him about oh, you're not paying your share of taxes. He's like I'm working within the system that you people created, right. So the same thing with shorting stocks. It's legal, but it's just crazy, like how did that even become a thing?

Jim Sogotis: 38:10

So years ago. I mean, I would say, you know, shorting has been around for a long time, but what? What it took on a whole new life when, when you had the eighties, uh, and, and companies were not doing what they, you know. I mean, for example, general Motors built a terrible car and people were like, well, you know, I don't want to own General Motors, I, you know, I'm mad at General Motors. So so what, what can I do? And you know, that's when shorting came to, came out Okay, you can short the stock and say that the stock is going to go down.

Jim Sogotis: 38:46

Now, you don't really want to do that. In, in, in an American company, you don't want to see someone fail. But when you have management that is not serving the people or its clients or the market, then they don't deserve to be patted on the back, they deserve what's coming to them. And that's why people start saying, ok, now we'll short, now I'll short this name, because I don't believe in what they're doing and their earnings are going to validate what I'm saying and the stock will go down.

George Stroumboulis: 39:21

Gotcha.

Jim Sogotis: 39:22

Now on some companies. It happens to them because it's just market problems or stuff like that, like, for example, the handheld industry. When they first came out all those names Palm, blackberry, blackberry I mean they were great things, but they never kept up with the times and so they ended up losing their market share. Apple came in, took things to, you know, and that's why Apple soared so much, and then companies like Palm and BlackBerry have basically gone by the wayside.

George Stroumboulis: 39:58

Which is sad. I'm Canadian and I'm Greek. And then you look at Research in Motion, which was BlackBerry, was started by a Greek Canadian, Michael Azadi. They used to have a Waterloo, so we were rooting for him. I was a big supporter of BlackBerry it was a great product. It was a great product at the time and the keyboard and everything, and then just the keyboard right. There's a great documentary that came out on the movie, but again, just not keeping up with the times and become obsolete.

Jim Sogotis: 40:25

It's unfortunate and people now take advantage of that Right and, in some cases, rightfully so. Now, in some cases it's just well. You know that's what happens. You know restaurants, for example. Today there's many restaurant chains that are closing. They're folding. They did too much, they over bought, they overextended who they were and now they're paying the price. So companies like that, you say okay. Well, not that you want to be greedy, but a guy like me wants my partners or clients to make money. We want them to do well, and so we do take advantage of those situations.

George Stroumboulis: 41:12

Absolutely your strategy, right. You always look for alternate investment strategies. How do you define alternate investment strategy so like is traditional real estate. Is that what you mean?

Jim Sogotis: 41:23

Well, so we stay, we don't go into real estate, we stay in the equity markets and what we look for are names in the equity markets that have potential. Now there's all kinds of different equity scenarios that people come up with and some of them would be like REITs, real Estate Investment Trusts. Those were set up as an income product within the equity market and some do very well. Some of them, you know, because of what's happened, have done poorly Right. So those are things that alternatives.

Jim Sogotis: 42:05

You, you know you have all these options, option markets and all the index markets that have come around. Those are, you know, you really have to be careful when you go into those, because the financial requirements number one are significant if you want to be a player in that market space. But you know, and those things can turn on you on a dime. I mean, those are things that you have to watch consistently and you know it's sometimes it's not worth the time and effort for the return that you're going to get. So we, so we go into stuff like that very, you know, with our eyes wide open, knowing that we have a strategy, that we're going to do this for this period of time and after that we're going to move on.

George Stroumboulis: 42:57

Gotcha Give advice right. You started your career. By the way, what industry was your father in when you were helping him?

Jim Sogotis: 43:04

My father was in the ship supply business. Okay, we're Greek, so we had to be. You know, something tied to ships?

George Stroumboulis: 43:11

Yeah, restaurants or ships, you guys chose a good one.

Jim Sogotis: 43:13

Okay, so he was supplying ships that would come into port and then you would right, okay so we supplied in san francisco we supplied a lot of the greek companies that had uh uh ship it's it was called tramp shipping, where they just get cargo to cargo go wherever they went. So you know, a lot of the greek uh companies did that. They a lot of greek companies, like the onassis companies. They had oil tankers, so we have large refineries on the West Coast, so they would have those contracts as well. So we supplied ships and I did that.

Jim Sogotis: 43:48

From the time I was the great thing about it, the great learning experience that I had, was as a young 10-year-old kid spending summers working, driving around in the trucks with all delivering two ships. I spoke Greek, okay, so the truck drivers that my dad had were Americans, so they would go to Greek ships with nobody that no Greek spoke Greek and it was just, it was just nobody uh, they couldn't uh communicate right. So here I am, this 10 year old punk, you know, and I'm, I'm, I'm trying to tell them, you know, going back and forth between them, and so I I learned my, I got my lessons from working for working for in the summer, growing up and then going into working for him as my first career opportunity.

George Stroumboulis: 44:44

That's incredible. I know you're talking about a 10-year-old boy dealing with ship workers, Like that's. Were you smoking with them by 10 years old, or what A pack of smokes.

Jim Sogotis: 44:55

Well, what was really nice was I'd go onto the ships and they would ask because, being Greek, the first thing they'd ask you after the food was delivered they'd say are you hungry? So I'd look at the driver and I'd say to him in English are you hungry?

George Stroumboulis: 45:15

And you think he's going to say no, yeah, no.

Jim Sogotis: 45:18

So I said, yeah, we are hungry, so we'd go up and sit down with the crew and have food together. So it was just a great learning experience about people and what, what makes people happy and how you and how you pull from people to really build yourself. And I think it's helped me in my career because I've dealt with people from all over any seafaring country in the world I've dealt with.

George Stroumboulis: 45:49

That's incredible.

Jim Sogotis: 45:50

And so I know the trades, the customs of all these different countries, and I look at everybody as just another human being.

George Stroumboulis: 46:01

See, I have three young daughters and in number. One thing I want them to be is just good people be able to communicate, and I'll tell them sometimes, you know, let's, let's talk to me like we're presenting, you know, like it's all about communication, understanding people, which at gluteus capital, your company, plutos, means wealth in Greek right. So it's just a great name and one of the principles your philosophy foundation is a word that is thrown around a lot in Greece but your average person here in the States doesn't know is philotimo. Talk to me about that philosophy and what it means for you.

Jim Sogotis: 46:34

Well, for me it means everything.

Jim Sogotis: 46:36

I mean, again, having the Greek heritage and being brought up that way.

Jim Sogotis: 46:41

My father never looked at any man and he would always say you find the good in people and you know, and we were raised with filo people, and so I I learned that from a young age.

Jim Sogotis: 47:00

I learned that, that there's good and there's bad people, and so we always I take that with today to, to put it in my context of today I look at people and you know, and I try to help them and I explain to them and I show them what we're trying to do so that we separate ourselves from other companies in that we live by the actual word philotibo and, if I may, part of our proceeds we are going to turn around and give, donate back into the Greek community wherever it's needed, for whatever purpose. And you know, and I have a special affinity for children, so if we can help, there is a organization in New York that right now they're helping graduate women with their expenses, school expenses and whatnot. So that's something that we want to get to, so that we can be a part of that, so that we can actually live the term filóctimo and hold our heads up for it.

George Stroumboulis: 48:09

That's magical. Doesn't get better than that right.

Jim Sogotis: 48:11

Yeah, and the people that you meet and the people that you talk to, I mean in our culture it just comes out, in us, yes. And when it just comes out, I mean you just look at you. You just say, well, you know, I'm really proud to be who I am and the heritage that I have, because it just says so much about what we can do as a people.

George Stroumboulis: 48:34

Absolutely. That's really good and I hope you guys could generate a lot to give a lot and make changes. How can people reach out? Get in contact with you specifically and we'll put all the links up.

Jim Sogotis: 48:47

So we have the website. We have, you know, my phone number is there and I you know what's the domain, so everybody can hear it. It's Plutuscapcom.

George Stroumboulis: 49:00

So Plutuscapcom? Okay, that's great, and then we'll put your LinkedIn on there as well, right?

Jim Sogotis: 49:07

And then my phone number is there. You know on there. And again, my email is Jim at Plutuscapcom. Okay, you know, I answer everything within 24 hours, that's it.

George Stroumboulis: 49:25

That's old school, which we don't have anymore. Right, it's the way I was raised. Yeah, that's great, that's absolutely great. So one thing I wanted to understand more of is the role of the banks here in the United States. Right, and I mean, it's globally central banks every country has. But let's talk about the US. Are they controlling and owning more of the process?

Jim Sogotis: 49:49

Like, just talk to me on the role of what a bank was versus today. Years ago, banks were places that you went and put your money because you could trust them. I mean, they were brick and mortar buildings and you knew that they were going to be there and that was, and that was great. As time went on, brokerage firms came along and they took money from banks. That's how they built the brokerage industry, which, again, was something that was okay because they were providing investors with a better return.

Jim Sogotis: 50:18

Well, after the 2010 fiasco, the government came, went back to the banks and they said please bail us out. So banks bought all the brokerage firms and they ended up owning them and over. What they now do is they want to own your assets. They want to control you and by control, they're not letting you go out.

Jim Sogotis: 50:48

If you buy something from Merrill Lynch today, you can't go out and buy something from JP Morgan and expect it to be in your Merrill Lynch account. They tell you no, we don't support that. So you're going to have to do that on your own. They want you to be strictly B of A Merrill Lynch and they want your mortgages, they want your auto loans, they want your investment dollars and they want your checking account. So they want to control your life, and this is one of the things that I don't feel good about, because not only do they want to control your life, the fees that they're charging you amount to a lot of money. They just keep raising their fees and their returns to you. They're going back to the old bank model where they're saying you know, if you get six to eight percent, you're doing well. Well, you know we've done significantly better over the years, and that goes directly to the client. There is no middle person that's going to take their cut.

George Stroumboulis: 51:55

And that adds up right. It's significant. So why do you think the banks? Because, again, is it easier to say you know what I have like for me personally? I have my bank, I have my checking, then I have a mortgage here and then I have another mortgage for something else there. Then I have and I'm like my gosh, it's just all over. Is it easier? Like, what's their, their end goal? Do you think? On wanting to have everything centralized and in control?

Jim Sogotis: 52:20

Well, number one they want to control you. And sometimes it does make sense, because if you have things all over the place, you know, unless you're good at doing that it can be time consuming, right, right. But to control you is, you know, to control your, your, whatever you do, is just it just doesn't sit well with me.

George Stroumboulis: 52:48

No, and seeing just all the other controls that we're at and people being silenced or censored and all this stuff.

Jim Sogotis: 52:50

And on top of that, there, there, there fees. There there's a fee for everything you do and while they tell you, you know you're not paying a commission, you're paying a fee, absolutely. And then if you have a broker, you're paying him a fee. So the fees start to really bound up and they, you know, cut into your returns.

George Stroumboulis: 53:09

Oh, absolutely.

Jim Sogotis: 53:10

And we don't do those. We don't do that.

George Stroumboulis: 53:13

So you're suggesting that people should be diversified. Don't go all in with a bank you should have. You know I'm making money from this arena where.

Jim Sogotis: 53:23

Well, you know. I mean you're going to have to buy your mortgages and your loans from them. Okay, your investments. You don't have to be tied to them, because you can do so much better. Instead of getting a 6% return, you can get significantly better through a manager that is out in the marketplace that does what you know what they're supposed to do to help their clients grow their wealth.

George Stroumboulis: 53:53

That's great advice From a rate I know you said earlier you know we could get up to the 20s. You know, have you seen anything higher over like really good years? Can you share?

Jim Sogotis: 54:03

Yeah, I've, I've seen, uh, we've. We had some pretty spectacular years where we were in excess of 40% and and what was what was really? Again, hard work and you know, and knowing what was coming and seeing, you know, being able to look out is why we did that. But you know it doesn't happen by accident, right Right, you know it takes a lot of work, it takes a lot of dedication. Again, the software that we use is very sophisticated and it can help us make our decisions easier, so that we know what we want to buy.

George Stroumboulis: 54:47

Last question I have for you and I appreciate you making the time is give. So from when you were a young boy and then you decided you want to get into the whole finance investment world. Like, what's advice for aspiring people that want to get into this space? What do they need to do? You need today.

Jim Sogotis: 55:10

You need to really study finance because the things that you learn today are a lot more usable and you need to. You need to pay your. Like anything else, you need to pay your dues. You start out someplace and you learn everything you can learn. You learn all the good things and with that you can start to market yourself. I believe that there is a tremendous opportunity because, again, the way banks do things today, I think there's going to be a tremendous opportunity for people to really come out and do the right things for clients and help them with their portfolio, help to grow their portfolios and their wealth.

George Stroumboulis: 55:48

Absolutely Primarily in the US only, or do you have any footprint outside of the country?

Jim Sogotis: 55:54

Right now we don't, and I mean in the US, I think is right now is significant Absolutely. You know, again, in San Francisco we have Silicon Valley, so we are exposed to a lot of those companies and there are a lot of them coming to Silicon Valley all the time.

George Stroumboulis: 56:14

Amazing, jim. I appreciate you sitting down with me. Thank you for with me. Thank you for having me. This has been amazing, my man. Thanks for listening to this episode of Invigorate your Business with George Strombolis. Please hit the subscribe and like buttons and follow me on all the main podcast streaming channels. Also, please share your comments when you can. I appreciate your help in expanding this network to a worldwide audience. Until next time, stay invigorated.

CONTENTS OF THIS VIDEO

00:00:00 Introduction to Financial Expert Jim Sogotis

00:01:55 Jim's Journey in Financial Markets

00:05:10 Investment Strategies and Opportunities

00:10:15 Shorting Stocks and Market Crashes

00:26:15 Trump's Impact on Financial Markets

00:30:40 San Francisco's Evolution and Challenges

00:35:05 Inflation and Economic Outlook

00:43:15 Ploutos Capital and Greek Philosophy

00:51:35 Banking Industry Control and Final Advice

WHAT ARE THE DIFFERENT TYPES OF INVESTMENTS IN THE MARKET YOU SHOULD CONSIDER

There are various types of investments to consider, each with different risk levels, returns, and purposes. Here are some common types:

1. Stocks (Equities)

  • Description: Ownership shares in a company.

  • Pros: Potential for high returns and dividends.

  • Cons: High volatility and risk, especially in individual stocks.

  • Best For: Long-term growth and capital appreciation.

2. Bonds (Fixed Income)

  • Description: Loans made to a corporation or government with the promise to repay with interest.

  • Pros: Generally stable, with predictable income.

  • Cons: Lower returns than stocks; some risk with corporate bonds.

  • Best For: Income generation and capital preservation, especially in uncertain markets.

3. Mutual Funds

  • Description: Pooled investment in a diversified portfolio managed by professionals.

  • Pros: Diversification, managed by experts.

  • Cons: Management fees; performance varies with the market.

  • Best For: Those looking for diversification and hands-off investment.

4. Exchange-Traded Funds (ETFs)

  • Description: A collection of assets (like a mutual fund) traded on the stock exchange.

  • Pros: Diversification, lower fees than mutual funds, and tradable like stocks.

  • Cons: Limited growth potential in some ETFs compared to individual stocks.

  • Best For: Flexible diversification with lower fees.

5. Real Estate

  • Description: Physical property or real estate investment trusts (REITs).

  • Pros: Steady cash flow from rental income, potential for appreciation.

  • Cons: Illiquid and requires maintenance or property management.

  • Best For: Investors looking for passive income and a hedge against inflation.

6. Commodities

  • Description: Physical assets like gold, silver, oil, and agricultural products.

  • Pros: Diversification; can hedge against inflation.

  • Cons: High volatility and storage costs.

  • Best For: Hedging against inflation and diversification.

7. Cryptocurrencies

  • Description: Digital or virtual currencies, like Bitcoin or Ethereum.

  • Pros: High potential returns in emerging technology.

  • Cons: Extremely high volatility and regulatory risk.

  • Best For: Risk-tolerant investors looking to diversify with digital assets.

8. Options and Derivatives

  • Description: Financial contracts that derive value from underlying assets.

  • Pros: High potential for gains and hedging strategies.

  • Cons: Very high risk; requires advanced knowledge.

  • Best For: Experienced investors or those looking to hedge.

9. Private Equity and Venture Capital

  • Description: Investments in private companies or startups.

  • Pros: Potential for high returns, especially if the company succeeds.

  • Cons: Illiquidity, high minimum investment, and high risk.

  • Best For: Accredited investors willing to take long-term risks.

10. Savings Accounts and Certificates of Deposit (CDs)

  • Description: Interest-bearing bank accounts and time-deposit savings accounts.

  • Pros: Low risk, stable returns, and liquidity (except for CDs).

  • Cons: Low returns, especially in low-interest-rate environments.

  • Best For: Low-risk investors and short-term financial goals.

11. Annuities

  • Description: Insurance products providing periodic payments in retirement.

  • Pros: Predictable income in retirement; tax-deferred growth.

  • Cons: High fees, surrender charges, and illiquidity.

  • Best For: Retirement planning and income stability.

12. Collectibles and Alternative Investments

  • Description: Art, vintage cars, wine, and other unique assets.

  • Pros: Diversification; potential for high appreciation.

  • Cons: Highly speculative, illiquid, and can be costly to store.

  • Best For: Wealthy investors seeking to diversify with unique assets.

Tips for Choosing Investments

  • Assess Your Risk Tolerance: Higher-risk assets like stocks or cryptocurrencies may offer high returns but can fluctuate significantly.

  • Set Financial Goals: Decide if you need growth, income, or capital preservation.

  • Diversify: Spread your investments across different asset classes to manage risk.

  • Consider Time Horizon: Longer-term investments often provide higher returns, but they may require patience.

Whether you’re a conservative investor or comfortable with risk, selecting the right mix of these investments can help build a balanced, resilient portfolio aligned with your financial goals.

WHAT ARE HEDGE FUNDS AND HOW DO THEY WORK

Hedge funds are investment partnerships that pool capital from accredited investors to pursue high returns using a wide variety of strategies. Unlike traditional mutual funds, hedge funds have more flexibility in their investment choices and often use advanced techniques, such as leveraging borrowed money, short-selling, and complex derivatives. Here’s a breakdown of what hedge funds are and how they work:

1. Structure and Purpose

  • Structure: Hedge funds are typically organized as limited partnerships where the fund manager is the general partner, and investors are limited partners.

  • Purpose: Their main objective is to "hedge" risk and generate positive returns in any market condition, though not all hedge funds actually focus on hedging risk.

2. Types of Hedge Fund Strategies

Hedge funds employ a variety of investment strategies, which can be broadly categorized as follows:

  • Long/Short Equity: Buying stocks expected to increase in value ("long") and short-selling those expected to decrease. This strategy aims to profit from both rising and falling stock prices.

  • Market Neutral: Balancing long and short positions to limit exposure to the overall market, focusing on stock selection.

  • Event-Driven: Investing in companies undergoing events like mergers, bankruptcies, or restructurings (e.g., merger arbitrage).

  • Global Macro: Investing based on economic and political views, often in global markets, currencies, commodities, and interest rates.

  • Fixed-Income Arbitrage: Attempting to profit from price discrepancies between various fixed-income instruments.

  • Quantitative and Algorithmic Trading: Using mathematical models and algorithms to execute trades automatically based on statistical trends.

  • Distressed Assets: Investing in the debt of companies in financial trouble, with the expectation of earning a high return if the company recovers.

3. Common Hedge Fund Techniques

  • Leverage: Hedge funds may borrow money to increase the size of their positions, magnifying potential gains (and losses).

  • Short Selling: Selling borrowed securities in anticipation of buying them back at a lower price, aiming to profit from declining prices.

  • Derivatives: Using options, futures, and swaps to hedge against risk or enhance returns.

  • Arbitrage: Exploiting price differences between related assets, often aiming for risk-free or low-risk returns.

4. Investor Requirements and Fees

  • High Minimum Investment: Hedge funds typically require a large minimum investment, often $1 million or more.

  • Accredited Investors: Usually open only to accredited or institutional investors due to the high risk and limited regulatory oversight.

  • Fee Structure: Hedge funds typically use a “2 and 20” fee structure, where they charge a 2% management fee on assets and a 20% performance fee on profits.

5. Risks and Regulations

  • High Risk: Due to leveraging and speculative strategies, hedge funds can be volatile and may suffer significant losses.

  • Limited Liquidity: Investors often face lock-up periods where they cannot withdraw funds, with some funds allowing only quarterly or annual redemptions.

  • Regulation: Hedge funds are less regulated than mutual funds, which allows for more freedom in their strategies but also adds to potential risks.

6. Hedge Fund Performance and Success Factors

  • Hedge funds are often measured by their “alpha” or ability to generate returns beyond the market benchmark.

  • A successful hedge fund manager requires deep market knowledge, risk management skills, and the ability to adapt to changing conditions.

7. Pros and Cons of Hedge Funds

  • Pros: Potential for high returns, diversification through alternative strategies, and protection in down markets.

  • Cons: High fees, limited transparency, restricted access, and potential for large losses due to riskier strategies.

Example of Hedge Fund in Action

Suppose a hedge fund is focused on a long/short equity strategy:

  • The fund manager might go "long" on tech companies expected to perform well and "short" on companies in industries that are struggling.

  • By balancing these positions, the hedge fund aims to achieve positive returns even if the overall market declines.

Hedge funds play a unique role in financial markets, catering to investors seeking high returns and willing to accept more risk and illiquidity. However, these investments require a sophisticated understanding of market dynamics, and their success depends heavily on the manager's expertise and strategic approach.

WHAT INVESTMENTS TO CONSIDER FOR MODERATE TO HIGH RETURNS

For investors seeking moderate to high returns, a well-diversified portfolio across different asset classes and risk levels is essential. Here are some investment options that offer potential for moderate to high returns, along with key points to consider for each:

1. Stocks (Equities)

  • Description: Investing in individual stocks or exchange-traded funds (ETFs) that represent ownership in companies. Stocks typically offer higher returns over the long term but come with volatility.

  • Considerations:

    • Growth Stocks: Focus on companies with high growth potential, such as tech or healthcare firms.

    • Dividend Stocks: Consider dividend-paying stocks for a steady income with moderate growth potential.

    • ETFs and Index Funds: Diversify risk by investing in ETFs that track major indices (e.g., S&P 500) or specific sectors (e.g., technology, energy).

2. Real Estate Investment Trusts (REITs)

  • Description: REITs are companies that own, operate, or finance income-generating real estate. They offer a way to invest in real estate without owning property directly and often pay high dividends.

  • Considerations:

    • Publicly Traded REITs: Easily tradable and often provide liquidity similar to stocks.

    • Private REITs: These may offer higher returns but come with limited liquidity and higher minimum investment requirements.

    • Types of REITs: Consider sectors such as commercial, residential, healthcare, or industrial REITs, depending on market conditions.

3. Bonds with Higher Yields

  • Description: Bonds are fixed-income securities that offer regular interest payments and return the principal at maturity. Higher-yield bonds can provide moderate returns with less risk than stocks.

  • Considerations:

    • Corporate Bonds: Bonds from stable, high-rated corporations offer moderate returns, while lower-rated (high-yield or “junk”) bonds offer higher returns with increased risk.

    • Municipal Bonds: Often tax-exempt, municipal bonds can provide moderate returns, especially for those in higher tax brackets.

    • Bond Funds and ETFs: These provide a diversified approach to bond investing across different sectors and risk levels.

4. Mutual Funds and Exchange-Traded Funds (ETFs)

  • Description: These funds pool investors’ money to invest in a diversified portfolio of stocks, bonds, or other assets. Managed by professionals, they offer a balance of risk and return.

  • Considerations:

    • Growth Funds: Focus on high-growth companies and may be more volatile but have higher return potential.

    • Balanced Funds: Mix of stocks and bonds, aiming for steady, moderate returns with lower risk than pure stock funds.

    • Sector-Specific ETFs: Target specific industries (e.g., healthcare, tech) with potential for high growth based on trends.

5. Alternative Investments

  • Description: These include assets beyond traditional stocks and bonds, such as hedge funds, private equity, and commodities.

  • Considerations:

    • Hedge Funds: For accredited investors, hedge funds use advanced strategies to achieve higher returns, though they may come with higher fees and risks.

    • Private Equity: Direct investments in private companies, often offering high returns but with a long investment horizon.

    • Commodities: Investing in commodities like gold, silver, or oil can hedge against inflation and diversify a portfolio.

6. Peer-to-Peer (P2P) Lending

  • Description: P2P platforms connect investors with borrowers, typically for personal or small business loans, offering interest income in return.

  • Considerations:

    • Risk Level: Returns depend on the creditworthiness of the borrower; higher-risk borrowers offer higher returns but also a greater chance of default.

    • Platform Choice: Choose a reputable platform with a strong track record in managing default risk.

7. Cryptocurrency and Blockchain Assets

  • Description: Cryptocurrencies like Bitcoin, Ethereum, and other blockchain-related assets can offer high returns due to their rapid price growth, though they are extremely volatile.

  • Considerations:

    • Risk Management: Given the volatility, limit your exposure to cryptocurrency to a small portion of your portfolio.

    • Investment Horizon: Cryptocurrency may be suitable for long-term holding if you believe in the technology’s future potential, but be prepared for significant price fluctuations.

8. Growth-Oriented Annuities and Insurance Products

  • Description: These are insurance products offering guaranteed income with potential for growth, often linked to market performance.

  • Considerations:

    • Indexed Annuities: Returns are tied to a stock index’s performance, offering moderate returns with some downside protection.

    • Variable Annuities: Allow investment in sub-accounts (similar to mutual funds) for potentially higher returns, with associated market risks.

9. Real Estate Crowdfunding and Direct Investment

  • Description: Crowdfunding platforms allow investors to buy shares in specific real estate projects, providing moderate to high returns based on property performance.

  • Considerations:

    • Investment Type: Choose between equity (ownership) or debt (loan) crowdfunding, depending on your risk tolerance.

    • Liquidity: Real estate investments are generally long-term with limited liquidity.

10. High-Yield Savings and Certificates of Deposit (CDs) for Stable Returns

  • Description: While not offering high returns, high-yield savings accounts and CDs offer stable, predictable income with minimal risk.

  • Considerations:

    • Interest Rates: Returns are lower but safe, making them suitable for the conservative part of a diversified portfolio.

Example Portfolio Allocation for Moderate to High Returns:

  • Stocks/ETFs: 50% (with a mix of growth and dividend stocks)

  • Bonds/Fixed Income: 20% (balance between corporate bonds and high-yield bonds)

  • Real Estate/REITs: 15% (including REITs or real estate crowdfunding)

  • Alternative Investments: 10% (hedge funds, P2P lending, or cryptocurrency)

  • Cash/High-Yield Savings: 5%

Key Takeaways

For moderate to high returns, focus on a diversified portfolio of assets that balance growth potential and risk. Revisit your allocation periodically to align with market conditions and your personal financial goals.

MORE ABOUT THE EPISODE

  • Money Moves: The Financial Expert's Guide

  • Navigating the Investment Landscape with Jim Sagotis

  • Smart Investing Will Transform Your Financial Future

  • The Wall Street Whisperer Shares His Secrets

  • Beyond the Market: Finding Wealth Through Wisdom

Jim Sogotis unveils the secrets to achieving exceptional investment returns in today's complex financial landscape. With over 25 years of experience navigating Wall Street's ups and downs, Jim shares insights that most financial advisors keep hidden from everyday investors – why banks push for 6-8% returns when his strategies consistently deliver 20% or more.

Discover the investment pyramid that balances risk and reward across your portfolio – from stable blue-chip foundations to strategic technology plays and higher-risk opportunities. Jim explains why cryptocurrency lacks the tangible backing he requires for client investments while revealing how his contrarian approach to market analysis helped him successfully short both Circuit City and Lehman Brothers before their dramatic collapses.

Looking ahead to 2025, Jim offers a compelling vision of economic growth under the new Trump administration and predicts revolutionary changes in the healthcare industry through AI applications. "The medical industry will be completely different than it is today," he explains, describing how DNA mapping and personalized treatment models will transform healthcare delivery within five years – creating massive investment opportunities for those paying attention to these emerging trends.

Perhaps most fascinating is Jim's candid assessment of how major banks have evolved from trusted institutions to entities that "want to control your life" through consolidated services and mounting fees that diminish your returns. As founder of Plutos Capital (named for the Greek word for wealth), he's built an alternative approach guided by the Greek principle of "philotimo" – an ethical foundation that includes donating portions of his fund's proceeds to community initiatives supporting education and children's causes.

Whether you're a seasoned investor looking to optimize your portfolio or someone just beginning to explore financial markets, Jim's practical wisdom and contrarian perspective will change how you think about growing wealth in today's economy. Connect with Jim directly through plutoscap.com to explore how his strategies might enhance your financial future.

BLOG POST

The Investment Landscape in 2025: Insights from Financial Expert Jim Sogotis

In a captivating conversation with Jim Sogotis, a veteran with over 25 years in the financial industry, we gained valuable insights into investment strategies, market trends, and economic forecasts as we enter 2025. Jim's expertise spans both the sell-side and buy-side of finance, providing a comprehensive understanding of how markets function and where opportunities exist for investors seeking substantial returns.

Jim began his career as a sales trader, serving as the crucial link between floor traders in New York and clients in California. He describes the evolution of trading from phone calls with two receivers pressed against his ears to today's electronic systems where milliseconds matter. This perspective gives him a unique appreciation for both the human elements of finance and the technological advancements that drive today's markets. His transition from municipal bonds to equities was driven by a desire for action and higher returns – something many investors can relate to when building their portfolios.

When discussing investment strategies, Jim outlined a pyramid approach that balances risk and reward. The foundation consists of stable stocks with decent returns – blue-chip companies that provide consistency. As you move up the pyramid, you incorporate increasing levels of risk: technology stocks in the middle tiers, followed by emerging technologies like AI and cloud computing higher up. At the peak are speculative investments, though Jim notably avoids cryptocurrency due to its lack of tangible backing. This structured approach to portfolio building offers investors a clear framework for allocating their capital across different risk categories while maintaining overall stability.

One fascinating aspect of our discussion centered on shorting stocks – betting against companies expected to fail. Jim shared candid examples of successful shorts including Circuit City and Lehman Brothers, explaining that while it may seem morbid to profit from failure, it serves as a market correction when management isn't serving stakeholders properly. This contrarian approach has helped him navigate major market downturns and even profit during crashes like the 2008-2010 housing crisis, when identifying overextended banks proved crucial for preserving and growing capital.

Looking ahead to the economic impact of the recent presidential election, Jim expressed confidence that markets will respond positively to Trump's return. "Wall Street likes Donald Trump," he stated plainly, suggesting we can expect "real growth versus hyped-up growth" in the coming years. He anticipates significant opportunities for investors as companies potentially return operations to American soil, though he remains skeptical about the effectiveness of tariffs as economic policy. This political-economic insight helps investors position themselves for the regulatory and policy shifts that inevitably impact market performance.

Perhaps most interesting was Jim's discussion of healthcare innovation. He predicts the medical industry will be "completely different" within five years, transformed by AI applications that allow for DNA mapping and personalized treatment modeling. This revolutionary approach could change how medicine is administered, potentially shifting from traditional pills to patches that deliver customized treatments. For investors, this signals enormous opportunities in healthcare technology and biotechnology sectors that are pioneering these advancements.

Through his fund, Plutos Capital (named after the Greek word for wealth), Jim applies these insights while maintaining a commitment to the Greek concept of "philotimo" – a principle that encompasses honor, respect, and giving back. Part of the fund's proceeds will be donated to Greek community initiatives, particularly those supporting children and education. This ethical dimension to investing reminds us that financial success can and should coincide with positive social impact. As Jim puts it, "We can actually live the term philotimo and hold our heads up for it."

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