Private Assets Meet Public Markets

In this podcast, Motley Fool contributors Tyler Crowe, Matt Frankel, and Jon Quast discuss:

• Earnings, outlooks, and conference call commentary from the big banks' third quarter.
• Private assets' role in an investor's portfolio.
• Stocks on their radar.

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A full transcript is below.

This podcast was recorded on Oct. 16, 2025.

Tyler Crowe: Private markets are becoming the public markets. This Motley Fool Money. Welcome to Motley Fool Money on Tyler Crowe, joined by longtime Fool contributors, Jon Quast and Matt Frankel. Now, we're going to cover the market buzz around private assets that are looking to make their way into retirement accounts and cover stocks on our radar, like we do every Thursday. But first, earning season is heating up. Yesterday, our colleagues discussed ASML's results, and we were tempted to also discuss Taiwan Semiconductor's strong earnings report and outlook. But I feel like we've discussed AI and the picks and shovels plays a lot lately on our episode of Motley Fool Money. We wanted to look at some of the non AI parts of the markets, and what better way to do that than with the big banks. The results from JPMorgan, Bank of America, Wells Fargo, and several others came out earlier this week. I don't want to rehash the numbers too much. Instead, I want to really focus on some of the big takeaways from either the outlooks or commentary that we saw in the market. Matt, what stood out to you on this most recent round of updates?

Matt Frankel: First of all, all the big banks, including all the ones you mentioned and others, beat expectations for earnings. Strong numbers so far, but there are some big winners among the group. I'd say, in order, my biggest winners of earnings season so far among the banks are Wells Fargo, Morgan Stanley, and Bank of America. With the latter two, Bank of America and Morgan Stanley, they both benefited from a robust IPO and M&A market, which I think Jon's going to talk about more in a second. This led to investment banking fee growth of 43 and 44% year year respectively for those two. Equities trading revenue was really strong at beat expectations. Not only that, Bank of America reported a surprise decline in their credit loss provision, which is going to come into play a little later in our conversation. But in general, investment banking was really strong, and Wells Fargo is particularly interesting because they don't depend as much on investment banking, and we're a big winner. Their stocks up 10% since earnings. One major thing is that management is now expecting 17-18% returns on tangible common equity over the medium term, up from the previous estimates, after the Federal Reserve lifted their asset cap finally after seven years. The bank is now going on offense. Charlie Sharf, the CEO, said that Wells Fargo aims to be the number one consumer bank, a lofty goal, and a top five investment bank, which they're not I don't even think they're a top 10 investment bank right now. Plus, like Bank of America, Wells Fargo decreased their loan loss provision significantly, so some really big surprises so far.

Jon Quast: As Matt points out here, the investment banking market right now is just red hot. Accounting firm Ernst & Young, they just released a report that showed that merger and acquisition deal values in September up over 110% year over year. Those are some big deals in there. Volume was a little bit lower, but even still the activity in September up 41%. I capped off a third quarter here, where value for M&A was up 239% from the third quarter of 2024, and volume was up 164%, so nearly tripling. Things are clearly heating up in this space. That was reflected in the banking numbers that Matt was just talking about. Just to drill down into these things a little bit further, JP Morgan CFO Jeremy Barnum said that there have been some IPO deals sitting in the pipes ready to go, and they've just been waiting for better valuation and lower volatility, and the third quarter delivered on that. The same applies to merger and acquisition activity. You also look at some of the comments from Bank of America, CFO Alastair Borthwick said that the fourth quarter is shaping up nicely, and then Morgan Stanley comes out and says, they're actually building their business with expectations that the next 3-5 years are going to show positive trends in this investment banking market, and so all this is really positive.

Tyler Crowe: I guess it goes to show what personality I have because I focused in a little bit on the one negative market commentary that I think we saw in all of the banking stuff. It was during the JP Morgan conference call, Jamie Dimon made some, we can say comments on the state of private credit and lending to private credit. This comes on the heels of Auto Parts manufacturer First Brands Group and used auto dealer Tricolor both filing for bankruptcy. These are both private companies. Those companies had loans with private creditors who also just had those private creditors had loans with big banks. Jamie Dimon hinted that he thinks the private credit and other these non bank financial institutions, lenders to private equity and things like that. A lot of his commentary pointed to being a little bit of a weak point in the market. I'm trying to sparse between his commentary being like, we don't know how good these folks underwriting is, which it's either a commentary on the market or just Dimon trying to talk up JP Morgan's book, which that's obviously his job a little bit. It certainly gives me something to follow up in the coming quarters as to whether or not it was, again, just Jamie Dimon talking it up or, if there's actually really something here. Let me pass this back to you. What were the questions that you were left with on this most recent earnings call? What do you want to follow up on?

Jon Quast: I would say that the investment banking commentary says that the economy is really in a healthy place or at least it's on the right track. My question is, what changes that and how secure is that? Investing is a lot to do with risk management. If I was to rewind the clock, go back to 2019, I just remember that economy feeling like a freight train in late 2019 and just asking, what would possibly change that? A once in a century pandemic. But this time it doesn't quite feel like a a freight train to me. It does feel a little bit more fragile, and maybe that's reflected in some of the comments you just brought out from Jamie Dimon. It feels like we're just a social media post away from changing some investor sentiment dramatically. I'm just looking at this. I'm saying, OK, the numbers are saying that the economy is very healthy or at least going in the right direction. What would it take to change that?

Matt Frankel: Look, I have mixed thoughts just like Tyler does, mainly because the sharp declines in the loss reserves from both Bank of America and Wells Fargo, really seem to contradict Jamie Dimon's statement on credit quality. I agree. I've been saying for a long time that the auto lending industry, especially the subprime market, could be a bit of a house of cards. It is far too easy to borrow, say, $50,000 to buy a depreciating asset, right now. It's harder to get a mortgage, which is a safer form of a loan. But that doesn't mean that all private credit is necessarily set for a collapse. It could just be specific to the auto lending industry. It's definitely worth monitoring over the next few quarters. But over the past few years, since 2022 when the bear market happened, pretty much every fear about deteriorating credit hasn't materialized as much as we thought it would.

Tyler Crowe: Coming up, private assets want to be in your retirement, and it could really affect the way we invest.

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Tyler Crowe: Admittedly, discussing first brands and Tricolors bankruptcy in the last segment isn't really exactly the best lead in for this next discussion, but not every transition could be perfect. The drumbeat around private assets has become becoming more available to the investing public is getting louder and louder. More and more asset managers are exploring ways to package private assets either as private equity or private credit into taxed advantage accounts like 401(k)s. Now, I myself have a lot of conflicting thoughts about this. On the one hand, making private assets available to individuals gives us a lot more investing choices, which most of the time more choices is better. Conversely, I can see asset managers that own these assets and trying to get them to individuals as a way of charging high fees for the privilege and access to private funds that they don't have anymore because low cost index funds and ETFs eroded a lot of fees that former mutual funds and asset managers used to enjoy. I'm going to put it both to you because there's a lot of stories out there of companies like Blackstone, BlackRock. All of these companies that are looking to find a new way to package private investments into 401(k)s or other types of retirement accounts. How do you see private assets fitting into your investment strategy?

Jon Quast: Personally, I'm a big fan of few regulations from Uncle Sam. On principle, I like the idea of being able to add private assets to my retirement account. There are some companies that I would have loved to in recent years, and one that comes to mind is Neuralink from Elon Musk. That's just a fascinating company to me, and I would love to be able to invest in my retirement account. I find it extremely interesting. That said, as I look about this from a broad perspective, opportunity without education is like giving a small child a box of matches. They can get hurt, and they can break things. I think there's a smart way to open this up, and I think that there's a bad way to open this up. Hopefully, we do it the smart way and not the way that creates a lot of problems, especially financially for people just getting involved in something that they don't really understand.

Matt Frankel: Tyler, you're right that so far, all of the deregulation around any type of private assets have allowed managers and investment platforms to charge high fees to investors. We've talked about this privately before. But there are funds out there that give investors private exposure to private companies like SpaceX and Open AI, and charge, let's say, ridiculous fees. But like you, I'm conflicted. It's both an opportunity and a threat to the retirement security of people in these 401(k) plans. The statement from the executive order that the president signed allowing this is misleading that the standard products like S&P 500 index funds are, "Are not letting people achieve secure retirements." The S&P 500 has been a great wealth builder over the long term. The problem is that the average person doesn't save enough for retirement. It's not that they haven't had opportunities to build wealth. I have conflicted feelings about this. Like Jon said, there is a right way and a wrong way to do it.

Tyler Crowe: There's been a lot of deregulation of access to things like this. It started with the 2012 Jobs Act is something I can think of. I think, ultimately, and this is I give my concluding thoughts, I guess, and moves like this feel like an appeal to the inattentive investor, the ones that sign up for whatever plans your company's 401(k) signs up for. To that, the good marketing of private equity isn't subject to the whims of the market or something like that for long term investments. You can see the marketing. It writes itself. But individual investors like us who put the time and effort into finding individual stocks to buy and hold over the long term. I don't know if we'll see as many benefits from this because we want to do our due diligence. We'll see how this shakes out, but I think that's where I'm going to end up landing unless somebody really blows me away with a really interesting offer in private capital. After that, we'll do stocks on our radar.

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Tyler Crowe: Guys, unfortunately, none of us were the recipients of that $300 trillion stablecoin fat finger that happened at PayPal either yesterday or today. I think we're just going to have to keep on building wealth, the old fashioned way, with some buy and hold stocks. With that in mind, what's actually on your radar this week? Jon, we're going to start with you.

Jon Quast: On my radar this week is company called TripAdvisor, symbol TRIP. At Hidden Gems, we value misunderstood companies, has something that the market's not appreciating, and TripAdvisor certainly has that, in my opinion. It's not just the TripAdvisor brand that you get here. You also get another brand, which is called Viator. Now, I want to just talk about Viator because I believe that the real value here, and this goes along with our discussion regarding investment banking. I think that TripAdvisor has something more valuable in Viator than what TripAdvisor is itself, and spinning it out or IPOing it in some way may unlock that value. You just look at Viator by itself for a moment. It's generated 882 million in trailing 12 month revenue. It's growing at 11%, which is double digits, high gross margin. It is profitable on a stand-alone basis. You look at something like Airbnb, a price to sales ratio of seven. Let's give Viator half that valuation at 3.5 times sales. Viator would have a $3 billion market cap on a stand alone basis. You look at TripAdvisor right now, it has a $1.8 billion market cap. Potentially more value in Viator as a stand-alone business than what it is right now under TripAdvisor. I think this is an underappreciated thing and why it's on my radar.

Matt Frankel: I'm going to talk about one of my longtime favorite real estate companies to follow Empire State Realty Trust, ESRT. They own the Empire State Building and a portfolio of about two dozen other primarily office buildings in Manhattan. Not only is the stock about 35% below its 52 week high, despite pretty strong performance from its business and the observatory on the Empire State Building, but I'm seeing signs that the New York City office market could be stronger than most experts think. Just consider that competitor SL Green just agreed to buy a 36 story office tower right near Park Avenue for $730 million. It's a big bet that the New York City office market will strengthen in the years to come. If it turns out they're paying the right price, the Empire State Building alone could be worth more than the current market cap of the company. Forget the other two dozen properties. Talk about a Hidden Gem. I think if the New York City office market does what SL Green thinks it's going to do, the Empire State could be a bargain.

Tyler Crowe: On the deregulatory thing, there's been another story about the Trump administration looking to privatize its portfolio of student loans, which I don't know if it's going to happen or not, but it gives me a pretty lame excuse to talk about SLM Corp. Ticker is SLM. This people might also know it as Sallie Mae, which is basically the bank similar to Fannie Mae & Freddie Mac, but it's focused on student loans. It is actually a publicly traded company. One of the things that makes it so appealing to me is if you actually look at the credit quality that it has, you think of student loans, they tend to be a relatively secure loan in the sense of paybacks. Our default rates are relatively low. They actually can't even be discharged in bankruptcy. They also get things like high rates of cosigned with parents and things like that, and a lot of what they actually have on their books is for masters in business or premed or law or something like that. It tends to have very high amounts with also good credit quality for future payments. It's just a business to me that looks incredibly well. If you look at things like net interest spreads, which is the difference between the interest rate on the loans and how much its depositors get, it's quite high compared to most other banks. You get a secure payment at a high net interest rate. This is a business right now that's trading for about 11 or 12 times earnings. I think people are worried about credit quality, but I think that might be a little overblown for a business that if we talk about hidden, it really is quite hidden out there and a very quality business for something. Matt, Jon, that's all the time we have for today. Thanks for sharing your thoughts.

As always, people on the program may have interests in the stock they talk about, and the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our shows. Thanks again to our producer Dan Boyd, for keeping us on schedule for Matt, Jon and myself. Thanks for listening, and we'll chat again soon.

Wells Fargo is an advertising partner of Motley Fool Money. SLM is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Jon Quast has positions in Airbnb. Matt Frankel has positions in Bank of America, Empire State Realty Trust, and PayPal. Tyler Crowe has positions in SLM and has the following options: short December 2025 $32 puts on SLM. The Motley Fool has positions in and recommends ASML, Airbnb, Blackstone, JPMorgan Chase, PayPal, and Tripadvisor. The Motley Fool recommends BlackRock and Empire State Realty Trust and recommends the following options: long January 2027 $42.50 calls on PayPal and short December 2025 $75 calls on PayPal. The Motley Fool has a disclosure policy.