Controllables – Investment Options for the Current Market 05.21.2025
Controllables – Investment Options for the Current Market
In the latest “Knowables” memo, we provided our observations of the main economic and political topics and their potential implications for investors. This memo is a continuation, highlighting areas of investment that will likely be more resilient and potentially prosper more than other assets, given current financial market conditions.
Government Bonds: Safe-haven assets like U.S. government bonds can provide security in a cautious economic environment.
o Credit risk is virtually zero, and interest rate risk is only realized if the bond needs to be sold before maturity.
o The yield curve is shaped like a bowl, with Money Market yields roughly 2/10th of one percent below short-term treasuries. Holding reserved cash in money market funds allows us to earn “Treasury-like” yields while pending deployment into longer-term investments.
Dividend-Paying Stocks: Companies with strong balance sheets and consistent dividend payouts can offer stability and income, which can help to buffer volatility. Depending on your needs for income, tax sensitivity and the size of your portfolio, this is an area you may wish to focus your attention.
Infrastructure: Investments in infrastructure can be attractive as governments may increase spending to enhance the capacity of their power grid or to repair deteriorating infrastructure. We believe there are attractive opportunities here and have identified ways to take advantage of them.
Foreign Stock Markets: Corporate valuations are more compelling in many of the foreign markets than the U.S., which has materialized in superior returns vs the domestic market this year. Greater diversification and the potential to earn higher returns than in the domestic market are the primary reasons you should consider selectively participating in foreign stock markets.
Our most recent “Knowables” memo pointed out many areas of change in the global economy. Although challenges remain, change creates opportunity, and for this reason we are more optimistic than pessimistic about what lies ahead. Our focus is always to help our clients steward their resources wisely, so if you have any questions related to this memo or unrelated matters, please don’t hesitate to reach out.
Disclosure:
The information provided in this newsletter is for informational purposes only and does not constitute investment advice. The recommendations and strategies mentioned may not be suitable for all investors. Each investor needs to review an investment strategy for their own particular situation before making any investment decision. Past performance is not indicative of future results. All investments involve risk, including the loss of principal.