Sometimes it’s nice to hear from a different voice. My friend and former colleague Jeff Troutner just wrote an interesting article on tariffs and (more importantly) investing that I thought you’d find interesting.
If you’d like a copy of the Index Matrix, or want to talk about it, let me know. Jeff’s in the process of updating them with 2024 data.
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The inevitable is happening as I write. US Stock prices are falling as short-term investors have become increasingly concerned about…what?
Potentially slower economic growth in the US? Continuing economic decline in Europe and China? A “tariff war” with Canada, Mexico, and China? The war in Ukraine (more billions flowing in or not enough)? DOGE (not enough waste fraud and abuse found or too much)? Orange Man good, Orange Man bad?
Pick a narrative. Wall Street wants you to.
You alone, with no prodding from your stockbroker or investment advisor, might be tempted to pick one. Maybe because of what family or friends are saying or what your favorite media sources are saying or maybe because you’re simply watching your portfolio values decline (not something we take lightly, which is why we put so much value on our counseling responsibilities).
You feel the pressure and the pressure says “do something”!
Before you do something (other than allowing us to do structured and disciplined rebalancing), consider what you signed on for with an asset class investing strategy.
You entered a different universe than the majority or retail investors and even most institutional ones. For good reasons.
This universe rejects short-term narratives as fleeting moments of high anxiety that fuel the destructive emotions of fear and greed. This universe fully embraces the modern science of investing—still evolving and constantly fueled by the well-deserved skepticism of an exploitative industry. This universe looks forward, not backward, and focuses on a dynamic, free-market fueled economy that rewards innovation, competition, and capital investment.
This universe doesn’t worship individuals no matter how “smart” they are or how hard they try to make you believe they’re smarter than everyone else. This universe values only the results of individuals and teams that are supported by the highest levels of research and have the kind of staying power to create, preserve, and grow your wealth using the extraordinary power of compounding.
This is why we reject short-term thinking and the emotions it elicits. This is why we reject stock picking and market timing, which chip away at (sometimes substantially) the power of compounding. This is why we’re so transparent and passionate about what we do.
This is why we’re optimistic about the US economy long-term. We hear news of Apple committing a new $500 billion investment in America. And SoftBank another $100 billion. Same with TSMC, the largest computer chip maker in the world. Tesla, SpaceX, Nvidia and many other companies innovating and expanding in the US.
We don’t need to, or should, concentrate our investments in those companies to reap the benefits of their optimism and risk-taking. In fact, broad diversification and a healthy and productive understanding of long-term risk and return is more than sufficient for us to help you realize your goals.
Yes, the short-term can be messy and scary. I don’t wish to diminish the concerns of older clients living off their portfolios. I’m now in the same boat. I get it.
But in times like these, simply staring at the Index Matrix and considering the perspective it provides gives me the confidence to stay the course. If that’s not enough for you, you should not hesitate to pick up the phone and discuss your concerns with the advisor you have trusted to help guide your financial future.