Forty "W"ritings

In an era of uncertainty, it's important to remain diversified with your equity exposure. US stocks have had a good run of form the last decade that have driven valuations up to a level that has historically meant muted forward looking returns. The rear-view for international stocks has not been as impressive but there is reason to be optimistic looking forward. International stocks are currently trading at a valuation discount compared to US stocks, earnings growth from foreign companies are improving, foreign governments are implementing more supportive economic policies and de-globalization could mean less money flowing into US assets from foreign investors in favor of their local economies and markets.

Private investments—such as private equity and private credit—can serve as a powerful complement to traditional assets in a broader investment portfolio because they provide exposure to investment opportunities that would otherwise be inaccessible via public markets. These opportunities continue to expand as the size of private markets grew considerably in recent years.

We recently updated our Capital Market Assumptions and the conclusions are that uncertainty as part of the late-stage economy has created a wide disparity among analyst about what to expect in the years ahead and investors will likely not be compensated for risk as much as they have the last several years.

As we navigate through the economic landscape of 2025, investors face a complex array of challenges that suggest the possibility of continued volatility ahead. The disconnect between sentiment indicators and economic data, ongoing trade policy uncertainty, potential shifts in global investment flows, and unresolved fiscal policy questions all represent significant headwinds that may lead to market disruptions in the short term. It's important to emphasize that these are possibilities rather than certainties, but prudent investors should consider these factors in their strategic planning.

Several forces have aligned to make this a pivotal moment for AI. Breakthroughs in computing power, the rapid rise of global data, and innovations in model development are accelerating adoption across industries. As AI becomes more embedded in everyday life and business operations, its trajectory is likely to shape the coming decades. For investors, understanding where AI is heading can help in navigating near-term uncertainty and staying positioned for long-term opportunity.

Concerns about a potential economic slowdown are rising, fiscal policy shifts and government spending cuts introduce some contractionary pressures however the near-term economic picture remains broadly positive. Tariff policies alone are unlikely to push the economy into recession. So far in 2025, diversification has re-emerged as a key with both bonds and international stocks outperforming US equities.