Trusted Financial Advisors’ Latest Commentary

The past three months have felt like a year to many investors. Summer began with enthusiasm over the seemingly unstoppable Artificial Intelligence (AI) juggernaut and ended with a much more skeptical debate about costs, valuations, data centers, and the risks of artificial intelligence itself. The stock market has broadened and I tried to take advantage of this with small, non-tech additions, but so far tech is still the driver of performance. Despite prominent players like Dario Amodi (Anthropic) warning of an AI apocalypse, explosive sales growth does not seem to be slowing down, although stock prices marked time over the summer. If quarterly sales and earnings reports turn out to be as huge as some expect (reported in October), then many AI related companies are reasonably priced.

Sales at most AI related companies continue to grow rapidly. That distinction matters: a stock can become more attractive even while its price goes nowhere if earnings continue to rise.  The following chart from Goldman Sachs shows steady growth in AI adoption by businesses, who are the most profitable customers for AI companies:

Hyperscalers such as Alphabet(GOOG), Amazon(AMZN), Meta(META) and Microsoft(MSFT), smell a once in […]

For most clients, it was a tepid quarter, up single digits driven mostly by dividends and interest. When averaged over the past 12 months, high single digit  returns were enjoyed by many clients, but performance cannot be generalized. Each client is unique. My practice is what is sometimes referred to as a “boutique” practice. Name a client and I  know quite a bit about his, her or their situation, especially about risk tolerance and the need for income. No two portfolios are identical. The graphic below, however, is a pretty good representation of our asset class allocation and how clients are generally allocated:

We saw nice performance from Coca Cola, Dominion Resources and Parnassus fund. Apple sagged but is now recovering nicely. Let’s take a look at various market sectors:

US Common Stocks: Indexes saw broadening participation. There was some profit taking in technology, a healthy sign. Banking stocks did well despite a turn in sentiment to a belief that interest rates will not be pushed lower by the Federal Reserve.  Deregulation, for which banks have lobbied for over a decade is happening. I believe looser policing of regulated banks will eventually […]

Fear Street

A year and a quarter that started out strong ran out of gas as the Federal Reserve failed to lower interest rates and as a military action (“excursion” “war”, call it what you will) resulted in strangulation of one of the most important channels for waterborne transport of oil, liquified natural gas, fertilizer and helium.  Although the United States is self-sufficient in most of these commodities, Europe, Asia, South America, and Africa are not.  With a global economy and supply chain that are integrated, the situation is affecting a wide range of industries and not in a good way.

The broad S&P 500 Index shed 7.3%. Other than energy producing companies in the United States and some consumer staples, no sector was spared: Tech stocks were off 11.4%, health care down 7%, even normally stable Utilities fell 7.6%. Foreign stocks suffered, but generally not as much as in the USA where indexes are weighted toward big technology firms. Our client portfolios are individually developed, but in general we saw these balanced portfolios produce gains or losses of around 2%.[1]  Most clients have a significant allocation to fixed income (bonds and preferred stock) and these held […]