“Nothing so undermines your financial judgment as the sight of your neighbor getting rich.” J.P. Morgan
The big question is whether the market is overvalued or still a great opportunity. Last month we presented reasons to sell the market and this month we presented reasons to stay invested. It reminds me of the head of one of the major US banks who said as long as the music plays, he will keep dancing. By this it meant he kept deploying capital into a risky section of the market because the other banks were. It did not end well. When you make an investment decision you must make assumptions and those assumptions impact your view of future earnings and in turn, whether the stock is cheap or expensive relative to future earnings.
We try to build diversified portfolios designed to meet our investors’ needs. Some like higher income so we look for higher yielding stocks but not at the cost of overpaying. Other investors focus on a total return, so their portfolios include gold stocks. The gold stocks had under-performed in the past few years but made up for it in 2025. We cannot time the market but believe that portfolios that include stocks with different characteristics will do well over time. One overriding feature is we prefer stocks with dividends, you get paid to wait for their capital performance. Stocks with increasing dividends are even more active candidates. We do not chase trends and have missed massive moves in crypto currencies and other trends. We do not feel the need to keep dancing just because the music is playing.
