As the cooler temperatures and mild days of fall settle in, markets have continued to move forward, driven by solid corporate fundamentals and economic resilience. While headlines can feel noisy at times, much of the news is already reflected in prices. The most reliable approach remains staying invested in line with your individual risk tolerance and long-term goals.
Predicting the future is difficult, if not impossible. This year is a good example. Despite constant headlines about war and inflation, the S&P 500 is up 11% year to date. Headlines have also been dominated by AI and the tech giants, yet energy, not tech, has been the best-performing sector in the S&P 500 so far. Meanwhile, market breadth is broadening, and many companies with attractive valuations are rising as overpriced AI names cool. Bonds now offer attractive yields as well. These trends have received far less attention. When something is common knowledge, it is already reflected in today’s prices. Investing based on headlines is rarely advisable.
Attempting to time the market based on headlines is costly. A recent BlackRock research note shows that the market’s biggest gains tend to come in a handful of days, and no one knows in advance which days those will be. Over the last 25 years, an investor who simply stayed in U.S. large-cap stocks earned about 11% a year. Missing just the 10 best days cut that to about 6%, and missing the 40 best days out of roughly 6,300 trading days turned the return negative.
That is why we follow a disciplined process that begins with a target asset allocation that is customized and designed to meet your long-term goals and risk tolerance. We invest in profitable companies trading at attractive valuations and build diversified portfolios across industry sectors of these high-quality businesses. Where short-term withdrawals are needed, we use Treasury bills and high-quality short- to intermediate-term bonds to provide stability and income. We also use high-quality laddered bond and treasury portfolios to buffer the overall portfolio volatility and provide for cash flow needs through bull markets and bear markets.
By remaining focused on this process rather than the headlines, we can continue building toward your long-term objectives with confidence. Markets will always have periods of noise and uncertainty, but a clear plan and consistent approach remain the most reliable path forward. As always, we invite you to come in for a review of your portfolio and year-end planning.
