We hope everyone’s summer is off to a lovely start and also that all had a great Fourth of July celebrating our amazing country. As I’m sure all readers are more than aware, it’s been a fairly fantastic market these last few months. The S&P 500 hit an all-time high on July 3rd, which seems like a bigger deal than usual, given where we were in April. For all of us, I sincerely hope it’s another great reminder of how patience and an even keel can make all the difference in investing outcomes.
(credit to ChatGPT above – amazing)
Here’s a chart showing the S&P 500 index over the last 12 months (+5.92% YTD as I write this at market close on 7/7). I always like to try and remember how I felt about the market at different points in that time frame when I look back. For instance, April brought with it an enormous amount of uncertainty as it relates to trade wars, real wars, tariffs, and the hope for new trades deals. The market clearly overreacted to this uncertainty (which is a recurring theme by the way) and effectively entered a downward spiral. Then, with some clarity, at least in the sense that countries including the USA would be willing to negotiate, came a nice market recovery.
Where we stand today regarding trade deals, tariffs, and President Trump’s plan forward is really anyone’s guess. We don’t sit here pretending to have the answer to such a complicated question, but we are certainly hopeful for the best outcome. I’m in the camp that says endless trade wars don’t benefit anyone, and forever tariffs are not the answer. I also think the decision-makers are of the same mind, regardless of the posturing. What we DO BELIEVE is, as I have said seemingly countless times, “The Market does not care as much as we do as individuals”. In the below image, you can see the Top 25 companies by revenue in the U.S. Please note how ALL of them show a year-over-year percentage increase in revenue, even during periods of uncertainty. This is what matters most when it comes to your portfolios, as we are buying shares of companies.
For those curious, what do we think about the Big Beautiful Bill? I love the tax break portion of the bill as so should our social security clients (I’m looking at you, most everyone reading this email). No taxes on the first $25k in tips is also a great idea in my view, but maybe that’s the old high school /college waiter in me. The reckless spending and disregard for National Debt is something I’m not a fan of. In the end, government being government.
What have we done with our portfolios? For those clients in our discretionary portfolios, which is almost everyone, we’ve used the recent market performance as an opportunity to de-risk our portfolios a bit. You may look into your accounts and see more cash than usual. This is by design and is just us taking profits and keeping some dry powder. This isn’t the same thing as saying we think the market is at a top or completely over-priced, but we are value investors at heart and are always looking for “good deals” in the market. We did the same thing last October, took the portfolios more aggressive in April, and now have them back to roughly the risk level we had them last October
If anyone has specific questions about your accounts, please do not hesitate to reach out. Otherwise, the team will be reaching out following our review schedules.
Until next time,
Brock W. RouchCIMA®
Managing Partner
Important Disclosures:
These views are those of the author, not of the broker-dealer or its affiliates. This material contains an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. All investments involve risk, including loss of principal. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources.
All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. You cannot invest directly in an index. Consult your financial professional before making any investment decision.
