2025 Third Quarter COMMENTARY

Too many professional portfolio managers have forgotten whom they work for. They talk endlessly about “tracking error,” “sector weights,” and “style discipline” but less so about the things that matter — making money for clients, understanding that investments represent real people and things, and limiting losses to the portfolio’s value.

The obsession with staying close to a benchmark isn’t prudence; it’s fear. Fear of looking different, fear of underperforming for a quarter or two.

An opportunity-sensitive approach flips that thinking.  It means giving ourselves permission to think independently — to buy great businesses when they’re temporarily unpopular, to hold cash when stock prices make no sense and their risks are high, to wait it out in bonds in order to generate a more certain return of investment, and to act decisively when real value appears.  I’d rather ask, “Is this good for my client?” or “Is this investment aligned with your goals and values?”.

The goal isn’t to mimic the market.  Being opportunity-sensitive doesn’t mean reckless bets.  It means disciplined conviction guided by research and the goals you have for your portfolio, not following a ghost of a benchmark index like the Dow Jones Average or S&P 500 which can at times lose touch with fundamental valuations and stretch to prices that seem just plain silly.  That’s where we are now.

Statistics and investment benchmarks are useful as a reference, not as a leash.  Your portfolio should work for you, not the other way around.