Unfortunately, there’s no Wednesday Reading List this week. I’ve been traveling back-to-back weeks for work, which is rare, and it’s only the second time in the 266 weeks since the blog launched that I wasn’t able to get one out.
Last week I was in a four day meeting with seven other wealth management CEO’s learning from each other, helping work through specific firm challenges, and brainstorming about ways to improve the client and employee experiences at our firms. They say it’s lonely at the top, which is a weird thing for me to write, since declaring yourself at the top of anything is obnoxious (and not how I feel). However, it allows me to follow-up and say that with friends and peers like the ones I have in the two groups I’m part of, one is never alone.
This week I’m at the Barron’s Advisor Independent Summit networking with and learning from the investment industry’s finest.
OK, with that said, you probably have questions about the market and whether D.C.’s operation chaos is going to sink it and the economy.
Our team put together a great piece – Growth Scare Hits Risk Assets – you should check out.
High valuations and high expectations created a challenging set up for U.S. large cap stocks, although forecasting exactly when that slowdown would happen is a fool’s game. Well, as the piece shared:
Weaker economic data, a patient Fed and shifting policy dynamics fueled slowdown fears triggering a broad selloff of in U.S. equities, with defensive sectors outperforming.
High-valuation stocks fell more than peers, while value and defensive sectors led. Consumer staples outperformed consumer discretionary by 11%, while Treasuries rallied amid shifting markets sentiment.
International Extends its Lead as the EAFE took another step forward and added to its 2025 lead over the S&P 500, led by EU financial and defense spending along with a cooling of U.S. high valuation stocks.
Where we go from here is anyone’s guess, but it’s an environment where diversification has been your friend so far and that should continue, something we talked to Jeffrey Kleintop, Charles Schwab’s Chief Global Investment Strategist, about in this podcast episode. Bob Weisse and I also addressed the market and how to navigate the uncertainty in this podcast episode.
We’re reminding clients that the right investment approach focuses on valuations and long-term return expectations and deemphasizes macroeconomic predictions and geopolitical news events. Which means that heading into this year, we were positioned more defensively not because of what I’ve already called operation chaos, but because U.S. stock valuations were high and bonds and international stocks were set to provide attractive risk-adjusted returns by comparison. We will continue to monitor the markets closely, remain disciplined, and make adjustments if return expectations change, but not if we don’t like the headlines.
And next Wednesday, I’ll be sure to get back to regularly scheduled programming. Until then…
