Is It Time To Play It Safe?
In a recent Bloomberg article, our portfolio manager, Jeff Muhlenkamp, summed up the current state of financial markets saying, “You’re going from an environment where everybody was certain to an environment where nobody is certain, and in and of itself that will impact the market.” As we’ve always maintained, financial markets hate uncertainty. Investors worldwide have recently shifted to a “risk-off” mindset—meaning they’re prioritizing safety over chasing big gains. This is foundational thinking at Muhlenkamp. Think of it like swapping an aggressive rollercoaster ride for a sturdy umbrella in a storm. Over the past few weeks, many have sold the [...]
Thoughts On: Managing your Portfolio in Uncertain Times
I’ve been paying attention to the stock market for over 30 years, and I can’t remember any times that weren’t uncertain. I checked with Ron, who has been paying attention since 1968, and he can’t remember any times of certainty either. When I think about managing your investment portfolio in uncertain times, I start with these questions: What is uncertain today? What has been uncertain in the past? Were these unprecedented at the time? How did you manage your portfolio then? What did you learn from that? For example, the 1970’s were unprecedented in having high inflation combined with high [...]
Free Economies and Free Trade
Tariffs have become a popular subject of discussion since President Trump was elected in November 2024, and some of that discussion is somewhat absurd. We think it is helpful to look past the headlines to some concepts we first introduced in 1992 with an article titled “How We Benefit from Free Trade.”[1] People benefit from a free economy with a large free-trade zone. A free economy is a volunteer economy in which the consumer is king, and no person (or company) can make you buy his or her product. The consumer drives free economies to benefit the consumer, and the [...]
Letter to My Daughters: On Investment Risk
Most conversations about investing start with the question, “How much risk can you handle?” which I think is a very good question. But few people take the time to define the term “risk,” and so they wind up making assumptions that may or may not be true. There are all kinds of risks in life, and there are different risks associated with investing money, but I’m going to focus on just three of them: The chances of losing my money, How much and how often the price of a security goes up and down, The probability of losing purchasing power [...]
Memorandum #153
Jeff and Ron Muhlenkamp discuss ongoing inflation and modest but steady GDP growth. In 2024 stock markets mirrored 2023, with AI-related tech companies driving growth, while long-term bonds yielded little. Read more of their insights and look ahead to 2025 in their Quarterly Letter. In the article "The 6 Ps of Financial Happiness," Tony Muhlenkamp explores the relationship between financial success and client happiness in investment management. Making clients happy is crucial for retaining them long enough to generate financial returns. The key lesson is that financial happiness, like life happiness, is the investor’s own responsibility—it requires discipline, planning, and [...]
Five Tax-Smart Investing Strategies for 2025
Tax-smart investing is a dynamic and ongoing process. You can keep more of your hard-earned money by leveraging tax-advantaged accounts, prioritizing tax-efficient investments, and staying proactive about ever-changing tax laws. As 2025 unfolds, make it the year you take your tax strategy to the next level—because it’s not just about what you earn; it’s about what you keep after tax. Here are five strategies that help to maximize what you keep when it’s time to pay Uncle Sam. 1. Maximize Tax-Advantaged Accounts Tax-advantaged accounts remain a cornerstone of intelligent investing. These include: 401(k)s, IRAs, and Roth IRAs: Contribute the maximum [...]
Thoughts On: The 6 Ps of Financial Happiness
We all know that the job of a money manager is to make people money. As difficult as that can be, the job of the client service manager is even harder. Client service has to make people happy. You might think that if you make people money, then they will be happy; but, I have learned you have to make people happy first so they can stick around long enough for you to make them money. It is a classic “which comes first, the chicken or the egg” dilemma. If I don’t make them happy, then I can’t make them [...]
Looking Toward 2025
Here’s a quick update on what we’re paying attention to as we come to the end of 2024: Markets Stocks: The market overall is expensive on almost all common metrics: market cap to GDP, price to sales, etc. We are very wary of the most popular, most expensive stocks that have done so well lately. A handful of VERY pricey tech stocks are driving the DOW, S&P500, and NASDAQ, Bond: The bond bull market ended in 2020 after almost 40 years. Long rates have risen for almost 4 years now, and bond prices have been DOWN for 4 years in [...]
Letter to My Daughters: On Making Investment Decisions
I’ve written to you about Passive Investing and Financial Freedom, and now I want to give you some tangible things you can do to realize that dream of Financial Freedom. The process is to: List what you are trying to do and assign dates and dollars (if possible) to those goals. Here’s a link to an example of how that looks. Create a balance sheet and an income statement. The balance sheet is a list of what you own and what you owe. The income statement lists what you make, what you spend, and what you save. Here's a link [...]
Five Strategies to Maintain Your Investment Focus After Election Day
Five Strategies to Maintain Your Investment Focus After Election Day Whether your preferred candidate won or lost on election day, the 2024 election results have alleviated a degree of market uncertainties, prompting a positive market reaction. We recommend approaching this post-election moment with measured optimism while staying true to sound investment principles. Here are five strategies to help you navigate this new political and economic environment: Markets React to Uncertainty: The post-election rally reflects the removal of ambiguity rather than a guaranteed economic windfall. Stick to your long-term goals and resist chasing short-term gains driven by political news. Rebalance If [...]