Christopher McMahon, CEO of Aquinas Wealth Advisors and author of “Faithful Finances”, spoke with Quartz for the latest installment of our “Smart Investing” video series.
Watch the interview above and check out the transcript below. The transcript of this conversation has been lightly edited for length and clarity.
ANDY MILLS (AM): Bank of America’s CEO said that they’ll jump into crypto payments if regulators allow it. Do you think with Trump’s executive orders and the new administration things will be better for Bitcoin investors going forward?
CHRISTOPHER MCMAHON (CM): I think that’s a great question. I don’t think we’ve ever seen a more favorable environment for crypto. Bitcoin got up to $109,000 the other day. I think today it’s still $103,000. We actually see it just from this momentum, the president endorsing it, the new head of the SEC coming in as a kind of a crypto guy, we see the thing to be $130,000. There is still a lot that’s unproven. The Bank of America (BAC) chairman was right out and saying if some rules change… Something we have to remember about crypto, which I think we forget about, we get so excited. Two of the biggest guys in the history of crypto are both in jail right now, so even though we have some ETFs that people can buy or they can go directly and so they can feel a little bit safer, it’s still the Wild West. And I think the B of A guy was right on when he said, look, if we get some regulation, this could come to Main Street. It’s not on Main Street yet, but I think it’s coming. And for investors, I think it’s a tremendous opportunity. And I think everybody’s portfolio should have some exposure to crypto. I think when folks say, ah, that’s, you know, that’s no good. Right? That’s bad because I’m not familiar with it, I think they’re really doing their portfolio a disservice. Not a huge allocation, but even a balanced portfolio, maybe 3% or 4%, maybe up to 10% if you’re feeling aggressive.
AM: Okay. So it’s still largely speculative, but you see $130,000 as a potential price target. Is there a timeline that you believe will happen?
CM: We think before the end of the year because the president and his wife both had meme coins drop yesterday, didn’t they? Which is amazing. And I think this environment is so positive for crypto that we have to understand that people who weren’t investing in crypto yesterday are talking about it today and there’s going to be more people buying it, and some of those large crypto ETFs. And the funds really haven’t penetrated the market as much because the brokers don’t believe it. The financial advisors didn’t believe it. Now the financial advisors are actually getting the memo. They’re going to offer it to their clients and we’re gonna start to see that available. I think we’ll actually start to see it available in some retirement funds in the next couple of years, large 401Ks, which will be a complete gamechanger.
AM: Do you see any risks or challenges this year with Bitcoin?
CM: Yeah, there’s enormous risk with Bitcoin. [Because] if today someone said, Why is it worth $103,000? I would say that’s based on wild optimism because no one uses Bitcoin to conduct business today. Criminals use Bitcoin to conduct business today. That’s the reality of it. Some very avant-garde early adopters are using it, but most people aren’t using it yet. Have you seen those bank machines, the crypto machines in the convenience stores? I was in a store the other day and I said to the woman, “I’m sorry, has anyone ever used this machine?” And she said, “It’s been here for six months, I’ve never seen anybody use it.” Then she said, “No, wait. Someone actually put their drink on it about three days ago.” So I thought, the person who put all these machines out there really spent a fortune on them, but I think it’s gonna have to be a buy and hold. I think we’re going to have to be ready for extreme volatility because I think we’ll see $130,000, as I said, but I think we’ll also see $70,000 again in the next year or so. So be up and down.
AM: Okay. $70,000, as well.
CM: Yeah, it’s not gonna be a straight line at all.
AM: Okay, gotcha. Which happens first?
CM: I think the $130,000 happens first because we’re on the top of that wave, I think where we are right now.
AM: Okay. So you said 3-5% is a decent allocation for speculating on Bitcoin. What about the other 95-97% of our portfolio right now? Should people load into Mag Seven again in 2025 or diversify away?
CM: That’s a great question and if we own some of those tech stocks now, this Mag Seven, I think we should hold most of them because we’ve been rewarded for Tesla (TSLA) lately. It’s been unbelievable. But I think if you take the Mag Seven the last few years, take the Mag Seven out of the S&P 500, it’s only been averaging about under 8% a year. That means as this market starts to broaden out, there’s enormous opportunities in traditional industries, right? Consumer cyclicals is a huge place. There can be energy. We very much like banking. We like it quite a bit. So we wouldn’t double down on the Magnificent Seven right now.
AM: If we’re holding Mag Seven in 2025, then what picks do you have for retail investors?
CM: A couple that we like very much are Constellation Energy (CEG). We love it. And it’s simple because it’s a broadbased energy company. We like energy as a whole, and a lot of the larger funds are holding Constellation Energy. Interestingly, they dipped their toe in both pools because they signed a large deal with Microsoft (MSFT) recently to supply energy for for all the AI data centers. That means that they are guaranteed about a 30% runup in their stock over the next 12 months, in our opinion. So we like Constellation Energy quite a bit. Well, there’s a mining company we were talking about earlier, Newmark Mining. We love them. They’re doing copper, they’re doing gold. They’re one of the largest gold and copper miners in the world. Gold is a hedge against inflation, of course. We’re not really worried about the inflation play right now. What we’re really thinking about is the uses of gold and copper and manufacturing.
AM: And you mentioned financial services, too. What picks do you have?
CM: We like American Express (AXP) quite a bit. We like MasterCard (MA), not as much as we like American Express. And generally we don’t like the regional banks. The regional banks are scaring us a little bit. And here’s why. There’s about a trillion dollars of commercial leases that are coming due. Interest rates haven’t been cut enough yet and unfortunately we have some concerns. Our rush hour traffic’s lower because people just aren’t coming into town as much. Even though we are forcing companies to come back downtown. We see some of these buildings refinancing at higher rates with lower occupancy as a potential real headwind. You know, that’s a term we use, ‘headwind’. We don’t want to say potential crash, but a ‘headwind’ for the market. Unlikely that that would bring the market down and stop all this momentum. Therefore, we like the big banks, the big banks are continuing to get bigger. And we think most of the big banks that we’re used to are undervalued by about 10-12% this year. Why take on undue risk when you have that kind of runup in a very predictable stock.
AM: Fascinating. So in your book, there are a lot of tips on how people can invest based on their values. What’s one thing you could tell our audience today?
CM: I would say be informed. I think your audience knows how to use the internet as well as anybody does, use these tools that are out there now. I would say technology is the king and demand of your advisors, if this is important to me, I need you to prove to me how you’re vetting this appropriately.