Thanks for reading.

• 📊 What to Do When the Entire Market Looks Expensive –  “NYU professor Aswath Damodaran [someone I respect and trust]…said that for the first time ever, he’s thinking about moving [some of] his money into cash and collectibles — saying there’s no place to hide in the stock market.

1. Do Nothing. As long as you have an investment plan in place that suits your risk profile and time horizon, the best move might be to just follow your plan.

2. Hold or build cash.Keep your allocation largely the same but directnewcontributions, or perhaps proceeds from overpriced or concentrated assets, into cash.

3. Change your asset allocation/diversify. Adjust your stock/bond mix, increasing exposure to what you believe is undervalued and reducing what you see as overpriced.

• Within stocks, diversify globally: Roughly one-third internationally is a good starting point.

4. Buy protection. Use derivatives like puts or futures to hedge your portfolio without altering your core holdings.

5. Make leveraged bets. Take aggressive, leveraged positions, such as buying puts or shorting stocks, to profit from a potential market correction.

• 💸 Warren Buffett is Holding Tons of Cash – “Berkshire Hathaway is now holding over 31% of their assets in cash [$382 billion], their highest percentage on record.”

• Valuations vs. Returns – Stock market valuations, shown on the x-axis below, have historically offered reasonable insight into five-year returns.

• AI is Huge – “In 2000 the 20 biggest firms on the S&P 500 made up 39% of its total value. Eleven of those were internet-related companies.

• % Higher Profits = Higher Valuations? – On the other hand, here’s a good chart and point from A16Z:

• 🏦 Record Quarterly Results – Given how profitable today’s companies are, the results and numbers from the following tech companies are extraordinarily impressive.

• Apple revenues growing 8% YoY [year-over-year] to a new Q3 record of $102 billion and net income growing 92% YoY to a new Q3 record of $27 billion.

• Google revenues growing 16% YoY to a new record high of $102 billion and net income growing 33% YoY to a new record high of $35 billion.

• Microsoft revenues growing 18% YoY to a new record high of $78 billion and net income growing 12% YoY to a new record high of $28 billion.

• Amazon revenues growing 13% YoY to a new Q3 record of $180 billion and net income growing 38% YoY to a new record high of $33 billion.”

• Despite these amazing results, the declines (AKA “drawdowns”), whenever they may happen, can be intense:

• 📱 Apple’s Revenue by Product Line vs. Other Corporations – “The iPhone produces more revenue than Bank of America or Meta. The iPad makes more money than AMD.” — The Economist

“When people get very excited, as they are today about artificial intelligence, for example…every experiment gets funded, every company gets funded…The good ideas and the bad ideas. And investors have a hard time in the middle of this excitement, distinguishing between the good ideas and bad ideas.”

– Jeff Bezos

As always, please reach out if you have any questions or would like to connect.

Lately, many financial commentators are bringing up the topic of an “AI Bubble.” 

Andrew Ross Sorkin had this to say (emphasis mine):

“Are we in an A.I. bubble? I’ve heard that question multiple times in one day.

The answer is that we are — we just don’t know when it will end. When the dot-com bubble popped, it wasn’t the end of the internet. It just meant that the weakest companies didn’t survive. And that’s probably what will happen again.”

What we see today are tech companies competing and spending massive amounts on what they believe is needed to build and scale their AI strategy.

Scott Galloway put it well: 

“Big Tech’s business model is flipping from asset-light to asset-heavy. Apple, Amazon, Alphabet, Microsoft, and Meta are on track to spend over $350 billion in capex this year — roughly $100 billion more than last year.

These companies spent the last decade building high-margin, high-free-cash-flow businesses in software, ads, and cloud. Now they’re redeploying those profits into the physical infrastructure of AI…The open question is whether Big Tech’s premium valuations — justified by years of asset-light growth — still hold up as they become asset-heavy.“

From an investment perspective here’s what’s important: You don’t need to time the market to make money and be successful. It reminds me of the following quote from Jack Bogle, the founder of Vanguard:

“The idea that a bell rings to signal when investors should get into or out of the market is simply not credible. After nearly 50 years in this business, I do not know of anybody who has done it successfully and consistently. I don’t even know anybody who knows anybody who has.” 

And remember, stocks don’t need an AI bubble to fall. They can decline for any number of reasons: cycles turn, liquidity tightens, there’s an oil shock, or something else unpredictable happens. The catalyst rarely looks like the one people are talking about ahead of time.

You don’t prepare by predicting the exact cause or moment of a downturn. It’s not possible. You prepare by building a portfolio designed to survive one.

That means diversifying, not just across the big household tech names, but across small, medium, and large companies, across industries, and across the globe.

Above all, know your risk tolerance. Markets have crashed 50% before, and they probably will again someday. The timing and reason is unknowable in advance, but you should have that expectation in mind.

Control what you can, and let markets do what they’ve always done: surprise us in the short run, and reward patience in the long run.

The goal isn’t to call the top. Finding the right portfolio and risk level, and sticking with that through good times and bad, is the best way to sleep well and earn good returns. 

Thanks for reading.

•  Why I don’t Own Any Gold – “I just don’t have the stomach for an asset that has the ability to experience 3 lost decades out of 4.” — Ben Carlson, Director of Institutional Asset Management, Ritholtz Wealth Management.

• How Do You Invest During a Bubble? – The options: diversify, hedge, go all in, or do nothing. 

• 💸 OpenAI’s Value – “If OpenAI was public, it would now be the 16th largest company in the S&P 500.” — Charlie Bilello, Chief Market Strategist, Creative Planning

• 🚘 Cheapest Car Insurance – Frustrated by high car insurance costss?

Life

• 🍔 Food Outside the Home – “Households now spend almost as much on restaurants, takeout and delivery as on groceries eaten at home.”

Quote of the Month

“Pause for a moment and ask yourself, how many of the things you have now are the things that you wished for a decade ago?”

– Trevor Noah

As always, please reach out if you have any questions or would like to connect.

I hope you had a great Summer and are looking forward to Fall.

The third quarter delivered solid gains: 

• Stocks rose all three months, and are now up five months in a row. The S&P 500 climbed 7.8% in the quarter.

• September was unusually calm: Not one day closed up or down more than 1%.

Looking Ahead: October has a reputation for volatility. Some of the market’s largest drops (e.g., 1929, 1987, and 2008) happened this month. After a long stretch of strength this year, a short-term decline wouldn’t be surprising.

The economy remains resilient, despite tariff headwinds:

• U.S. GDP grew 3.8% in Q2, the fastest pace in nearly two years.

• Corporate earnings are on track to rise 12% year-over-year, the third straight quarter of double-digit growth.

• Unemployment sits at 4.3%, well below recessionary levels.

• Retail sales are still climbing, showing strong consumer spending.

Big Picture Theme: Artificial Intelligence (AI)
AI has become the economic story of the decade. Tech giants are racing to secure the computing power and talent needed to build the most advanced models. Here are a few eye-catching stats (emphasis mine):

• “AI-related stocks have accounted for 75% of S&P 500 returns, 80% of earnings growth, and 90% of capital spending growth since ChatGPT launched in November 2022.” (JPMorgan)

• “The AI boom has contributed 40% of [America’s] GDP growth over the past year—a staggering figure for a sector that accounts for just a few percent of total output.” (The Economist)

• “There are now 498 AI ‘unicorns,’ or private AI companies with valuations of $1 billion or more, with a combined value of $2.7 trillion, according to CB Insights. Fully 100 of them were founded since 2023. There are more than 1,300 AI startups with valuations of over $100 million. (CNBC)

For investors, this underscores the importance of diversification. Chasing hype with concentrated bets can be risky, but ignoring innovation is also a bad idea. Spreading your investments helps ensure you own the eventual winners that rise to the top.

• 📈 13 Years of All-Time Highs – “We’ve now seen 13 straight years with at least 1 all-time high, surpassing the epic 1989-2000 streak (12 years).”

• 📊 Sector Performance in 2025 – “Technology and communication services (basically tech) both experienced massive drawdowns earlier this year [down 26.2% and 22.7%] but are now each sitting on 20%+ gains for the year.“

• 4️⃣ The Fourth Quarter Tends to be Positive  – “The fourth quarter historically has been the best quarter of the year, higher 80% of the time and up 3.8% on average.“

• 🚀 More IPOs  – “About $7.6 billion worth of I.P.O’s priced in the US in September [Klarna, Netskope, Stubhub, were a few], making it the biggest month for such deals since 2021. — Bloomberg. 

• 💸 Safe Retirement Withdrawal Rates – In personal finance news, many people are familiar with the concept of the 4% rule. It states that a sustainable withdrawal rate from your portfolio is 4%.

• 💸 Forced Roth 401(k) Savings For Those Over 50 – In more personal finance news, employees age 50 and up are allowed to contribute an extra $7,500 per year to their 401(k), on top of the standard $23,500 limit for 2025. This is called a “catch up” contribution.

• ％ Mortgage Rates: The Fed’s recent 0.25% interest-rate cut doesn’t automatically mean mortgage rates will fall much. Mortgage rates depend more on long-term bond markets, inflation expectations, and lender costs. So we could see only a small change, not a big drop.

• ⏳ Homes Sell At Slowest Pace in a Decade –  “The typical home that went under contract in July was on the market for 43 days. That’s up from 35 days a year earlier and is the longest span for any July since 2015.”

• $ Housing Price Declines – In July, “home prices fell in 39 of the 50 most populous U.S. metro areas on a seasonally adjusted basis, month over month…The highest number of metros to post a monthly decline going back to 2012.”

Life

• Financial Advice for Kids – This is a great letter from Morgan Housel to his son. Written back in 2015, it’s still well worth a read. 

• 👶 Daycare Costs – San Francisco, San Mateo, and Santa Clara County have some of the most expensive daycares in the country. 

Quote of the Month

“Wealth has an interesting way of distorting our perceptions and changing our motivations. Even people who are objectively successful can be made to feel otherwise.

If you want to counteract these pernicious effects, then you will need to remember who you are and what you value. Finding ways to enjoy your money without identifying with it should be your end goal. That’s how you protect your wealth from yourself.”

– Nick Maggiulli

As always, please reach out if you have any questions or would like to connect.

I hope you had a great Labor Day weekend.

Here’s how investment markets performed in August:

• US Stocks. The S&P 500 rose 1.9%, the fourth-straight month of positive returns. Over the past 100 days, the index is up more than 25%. US stocks as a whole (including small- and medium-sized companies) rose 2.5%.

• International Stocks. International stocks were up 3.3%. 

• Bonds. US bonds appreciated 0.8%, while international bonds were flat. 

Regarding inflation, The Federal Reserve’s preferred measure came in at 2.9% for July, the latest data available. That is increasing versus the past few months: June (2.8%), May (2.7%), and April (2.6%), and above their 2% target. See the last bullet point below for why tariff-driven inflation hasn’t fully materialized.

In August we also learned of a weakening jobs market: July added just 73k jobs, below the 100k expected. May and June’s job numbers were also revised down by 258k total, leaving the 3-month average at a fairly weak 35k. 

As a result, The Fed seems open to an interest rate cut this month. This has more to do with the weak job market, and less to do with inflation settling down to their 2% target.   

Thanks for reading.  

• 🌐 Global Stock Market Performance – “Almost every other country with a decent-sized  economy is outperforming the U.S. stock market in 2025.” — Ben Carlson, Director of Institutional Asset Management, Ritholtz Wealth Management

• September Clouds? – “September is historically the worst-performing month for the S&P 500…since 1928, the index was down an average of >1%, posting gains only 44% of time” — Liz Ann Sonders, Chief Investment Strategist, Charles Schwab

• 📈 S&P 500 Up More than 25% in 100 Days – In good news, “The S&P just rallied 25%+ over 100 trading days for the 12th time in the last 70+ years. Three months later, it was higher every time.” — Bespoke Group

• 🚘 Electric Vehicle Stocks Underperforming – Tesla, Rivian, and Lucid have all had negative performance this year.

A note on the housing market:

“Renting looks superior to buying throughout most of the country. As John Burns Research and Consulting noted in early July, ‘For the first time since 2006, purchasing an entry-level home costs more than twice as much per month as renting.’” — Nick Maggiulli, Of Dollars And Data

As a result, “homebuyers are in the best position in more than five years to find the right home and negotiate for a better price. Current inventory is at its highest since May 2020” — Lawrence Yun, Chief Economist, National Association of Realtors.

• 🔮 Housing Price Declines Ahead? –  “America’s housing market is flagging. Across the country, prices have drifted down in the first half of the year, with most cities [75%] seeing falls in the past three months.” — The Economist, America’s housing market is shuddering

• $ Housing Prices, Past Year – “Prices are still creeping up in the north-east and the mid-west, but the west and, in particular, the south are hurting.” — The Economist, America’s housing market is shuddering

• 🐢 Slow Real Estate Markets – These places are seeing homes sit on the market for much longer compared to a year ago:

• 🚚 More Homes For Sale – Housing inventory is returning to ‘normal’ ranges.

Jobs / Tariffs

• AI IT Jobs Taking Over – Amazing growth in AI-related IT jobs:

• Tough Times for Young Software Developers – “Among software developers aged 22 to 25…head count was nearly 20% lower this July versus its late 2022 peak…daunting obstacles for the large number of students earning bachelor’s degrees in computer science in recent years.” — Justin Lahart, The Wall Street Journal

• 🌎 Tariffs Delayed Effect – “Barclays research suggests that inflation hasn’t increased that much partly because the U.S. hasn’t collected tariffs on many goods—for now. In June, just 48% of U.S. imports were actually subject to tariffs, thanks to myriad exemptions…

Quote of the Month

[Regarding inheritance]

“Leave the children enough so that they can do anything, but not enough that they can do nothing.”

– Warren Buffett

As always, please reach out if you have any questions or would like to connect.

I hope you’re having a fantastic summer and finding time to relax, recharge, and enjoy what matters most.

The biggest news in personal finance last month? A new tax bill. It’s making waves and could have a real impact on your finances. If you’d like a detailed breakdown of what changed, click here.

Tax laws affect everyone differently, so if you’re wondering what it means for you, let’s connect. A little planning now could make a big difference later.

In this month’s newsletter I’ve pulled together a few insights from July, covering the markets, real estate, and how inflation is affecting everything from college costs to beef prices.

Thanks for reading.

• ⛷️ The Danger of a Market Melt Up – The New York Times recently highlighted concerns about U.S. stock market valuations. While market forecasts should be taken with a grain of salt, the article raised valid points. One example (emphasis mine):

• August Down? – Another reason why this month’s market performance may not be positive: a quirky bit of market history (emphasis mine):

• ＄ Nvidia > Apple – “Recently, Nvidia $NVDA (brown) surpassed $4 trillion in market capitalization [value] and also accounted for over 8% of the S&P 500. The last time a stock was over 8% of the S&P 500 was 56 years ago, IBM (green) in 1969.” — Jim Bianco, Bianco Research.

• 📱 Bay Area Company Values vs. India + Japan + Germany – It’s not the most readable chart, but what it shows is amazing:

• 📊 Performance After +25% in 3 Months – On the optimistic side, we just wrapped up a great 3-month rally within the S&P 500, which was up more than 25%. It turns out that this is a very optimistic sign (emphasis mine).

• 🏠 Home Prices at All-Time Highs – Home prices are still setting records, with the median nationwide price hitting ~$435k.

• Inventory Up – As of June 2025 there were 1.42M homes for sale. This is up quite a bit compared to June, 2024 (1.3M) and June, 2023 (1.0M). 

• ⬇️ More Price Cuts – As inventory has risen, we’re also seeing the percentage of homes with price cuts increase.

• 🚚 Where People Move – A great look at where people tend to move (Florida, or the west in general) or stay put (Midwest, South):

Expenses / Inflation

• College Costs vs. Parental Income – How much parents pay for college as income increases:

• College Cost Inflation – As for the price of college:

• 🏥 Expenses Over Time – This chart shows the changes in the proportion of different spending categories over the past 96 years.

• Beef Prices – Are likely to stay high for years, according to a new government report. As of July 1, the U.S. cattle herd has fallen to 94.2 million—the lowest mid-year level since records began in 1973.

Quote of the Month

“Some people are so poor all they have is money.”

– Bob Marley

As always, please reach out if you have any questions or would like to connect.

U.S. and global stocks rallied in Q2, with the S&P 500 up 10.9% and international stocks (MSCI ACWI ex-U.S.) rising 12.0%.

Investors leaned into tech and AI optimism, even as consumers grew more cautious and economic uncertainty lingered.

Let’s start at home. The S&P 500 ended June back at its February highs, thanks mostly to tech stocks that can seemingly do no wrong.

• Tech led the pack with a stunning 22.9% return for the quarter.

• Other winners included Industrials (+12.9%) and Communication Services (+12.8%).

• On the flip side, Energy (-8.5%) and Health Care (-7.2%) performed poorly.

What’s notable is that this rally wasn’t broad-based: Most of the gains came from a small group of very large companies. 

Despite the cheer, not everyone is celebrating. Consumer sentiment is slumping. The University of Michigan’s Index dropped nearly 30% in the first four months of the year, a historically sharp decline. 

In short: the stock market seems to believe in a brighter tomorrow. The average consumer? Not so much.

• Some officials want to hold tight.

• Others are calling for rate cuts—most likely to happen in September.

• Inflation projections are inching up, and growth projections are ticking down.

• U.S. Aggregate Bond Index: +1.2% in Q2

• High-yield bonds: +3.5%

• Municipals: slightly negative (-0.1%)

• Europe: Spain, Germany, France, and Italy all posted double-digit gains. The European Central Bank cut rates again, trying to thread the needle between slowing inflation and fragile growth.

• China: Still stuck in the mud. Real estate woes and trade tensions with the U.S. continue to weigh down sentiment. Chinese markets rose just 3.5%.

• Emerging Markets: This is where the fireworks were. Korea +34.5%. Taiwan +23.9%. Latin America posted strong gains too—Argentina, Mexico, Brazil all up double digits. A weaker dollar helped.

Where do we go from here?

There’s plenty to feel good about. For example, company earnings are holding up well. According to Factset, a higher proportion of S&P 500 companies issued positive earnings per share guidance for Q2 than average, suggesting resilience. 

Inflation, while still sticky, is lower than last year. Central banks are starting to blink.

But potential cracks remain:

• Consumer Confidence is fragile.

• Growth is slowing.

• Valuations are high. 

Sources: Data from Morningstar Direct. Returns over one year are annualized