Kevin February 2025 Desk Memo

Clients frequently inquire about the potential impact of administrative changes on their financial plans and investments as well as our strategies for adapting to the current economic landscape.

As we move through the year, we remain cautiously optimistic about the markets. Several indicators suggest that we could see positive performance provided certain conditions hold steady. One of the key factors influencing our outlook is the current macro-economic environment, which includes relatively low unemployment rates, reasonable retail spending, and interest rates that, while not as low as we might prefer, are still conducive to growth.

However, we must also acknowledge the unpredictability of the global political climate, particularly with the ongoing actions and policies of the current administration. While these factors add a layer of uncertainty, we believe that the underlying economic fundamentals remain strong enough to support a positive market trajectory.

In our discussions with clients, we are focusing on macro-economic factors and how they impact investment strategies. One of the primary concerns we are addressing is inflation. Over the past few years, we have seen interest rates rise in an attempt to curb inflation. And while the Fed has recently started to lower short-term rates, the market’s response has been to increase long-term rates. This divergence suggests that inflationary pressures may persist longer than initially anticipated.

To mitigate the impact of inflation on your portfolios, we have been adjusting our investment strategies. Traditionally, we have relied on a mix of stocks and bonds. But in the current environment, we are incorporating more alternative investments. These alternatives include assets that tend to hold their value better during inflationary periods, such as real estate, gold, energy, and other commodities.

Additionally, we are exploring other opportunities within the realm of private alternative investments that seek to enhance portfolio performance while lowering correlations to publicly traded securities. These include private equity, which provides access to thousands of companies not traded in the public markets, as well as private infrastructure investments offering both income and appreciation potential.

Our goal is to ensure that your portfolios are well-positioned to weather the challenges of an inflationary environment while still capturing the growth potential of the markets. We are committed to staying vigilant and responsive to the ever-changing economic landscape, and we will continue to adjust our strategies as needed to protect and grow your investments.

On a personal note, I am looking forward to spending some quality time with my family on our upcoming ski trip. There’s nothing like carving fresh tracks and soaking in the crisp mountain air.

Thank you for your continued trust and partnership. If you have any questions or would like to discuss your portfolio in more detail, please do not hesitate to reach out.