Our team regularly reads articles from industry peers and trusted resources to stay up to date on financial markets.  We enjoy reading about topics related to economics, investments, current events, and financial planning.

In addition to circulating some of the best pieces internally, we thought our clients, partners, and friends might enjoy reading some of the same articles as us.

Here are recent pieces that our team members have read, along with some commentary on why we found the respective articles interesting.

Tom Buhrmann: Private Assets Are Less Volatile Than Public Assets, As They Should Be

I read a short white paper in early May about why private assets are less volatile than public assets. While this may be somewhat intuitive, the paper did a nice job contextualizing why this is the case and providing supporting historical data. Understanding the differences between public and private assets is critical in portfolio construction and how we think about managing volatility for clients.

Andrew Denenberg: How presidential elections affect the stock market

With the election coming up in a few months, it’s always a good reminder that it’s usually the case that investors overestimate the near-term impact of elections on market performance. As this article shows, market returns have historically been more dependent on economic and inflation trends rather than election results.

Michael Garrison: The investing revolution of my lifetime

In this article, Josh Brown talks about the acceleration of innovation in financial markets.  Josh covers how, over the last 25 years, trading has gotten easier and more accessible to investors and how this has opened the door for strategies such as direct indexing (which we are a big believer in) to proliferate.  He also discusses how he thinks historically non-tradeable assets (such as collectibles) could end up in portfolios.  My favorite part of the article, however, is his insights on how (and why) different generations invest the way they do.

Kristopher Gutowski: When is the Mean Reversion Coming in the Stock Market?

It’s reasonable to think that the stock market climb cannot continue ad infinitum and wonder when it might turn. All I can tell you is that I know that I can’t predict when that will happen. We know that stock market momentum is real, and we can’t risk sitting on the sidelines waiting for a crash to happen. What we can do is diversify our portfolios to control our overall risk.

Mike Karmin: Markets are betting there’s a 100% chance the Fed cuts rates in September

Famous last words. That’s what I think when I see the words “Fed” and “100%” used in the same headline. While I do believe that it is time for a rate cut, the Federal Reserve has traditionally been slow to move and there’s a lot that can still happen between now and September. By no means can we say that a rate cut is a certainty!

Kathy Klein: Here’s how people with $1 million or more changed their asset allocation last year

The Capgemini annual 2024 World Wealth Report provides an in-depth analysis of the total asset allocation of high-net-worth investors. The data is as of January 2024 and shows that these investors rely heavily on alternatives (including real estate) at nearly 35% of their portfolios. We believe alternatives are a key diversifier in the current environment and help to dampen portfolio volatility. Additionally, the report showed that these same investors had approximately 25% in cash. I am surprised at the level of cash since a 4-5% yield is better than a couple of years ago, but net of taxes and inflation is still a very low number. High cash levels reflect the level of concern as we enter election season and navigate the current geopolitical risks.

Ruben Rivas: Why Your Fund Manager Can’t Beat Today’s Stock Market

This Wall Street Journal article underscores a core belief of mine formed from my time at both a big bank and a big brokerage house. When it comes to active fund managers, higher costs and performance inconsistency mean they can be often difficult to justify using in in client portfolios. Fast forward to the present day, the narrow concentration of stocks moving the market further handcuffs these active asset managers and creates an even higher likelihood of underperformance. I often tell clients my move to SWP was the best thing we ever did. This article highlights one of the many reasons why.

Merrick Singer: Boston Celtics’ majority owner puts team up for sale weeks after NBA championship

I like this article is because it reminds me of an investment philosophy to “sell high.” Just like the Boston Celtics “stock,” valuations in general are high right now; the stock market is at an all-time high, and portfolios have soared recently. This may be an opportunity to revisit your portfolio and stock exposure and take chips off the table. At SWP, we put a significant amount of focus on reducing risk, and even when markets are at all-time highs, it could be an opportunity to take another look and “sell high.”

Michael Tuber: How Bull Markets Work

With a strong first-half performance behind us, the focus has again turned towards what’s ahead for the market.  Below the surface, there has been a notable disparity between the winners and losers, as more than 25% of stocks in the S&P 500 declined by at least 5% in the first half (highlighting the importance of diversification).  While the relatively tranquil markets will inevitably turn choppy again at some point, it’s important for investors to remain steadfast in their approach.  In this article, Ben Carlson explores how investors should approach calm and volatile markets similarly by ignoring them.

Conclusion:

We look forward to sharing more articles with you in the future. In the meantime, if you’d like to discuss how the topics in these pieces may apply to your own portfolio, please do not hesitate to reach out to a member of our team.