By: Matt Garrott
It’s officially Pumpkin Spice Season and it recently came to my attention that pumpkin spice is actually a mix of nutmeg, cinnamon, ginger, cloves, and allspice. This mélange doesn’t smell like the inside of a pumpkin at all, thankfully. Is there a lesson for investors on how a mix of different ingredients can come together (in the right proportions) to create a timeless flavor profile? I’ll stay in my lane and focus on investing instead.
The S&P 500 posted a gain for the fourth month in a row, up 2%. Year-to-date, the index is up almost 11%. International stocks still lead the way with Developed International up 23% and Emerging Markets stocks up almost 20% on the year enjoying a tailwind from US Dollar weakness.
For investors that haven’t been paying attention, an 11% return through August sounds great. They don’t care that the S&P 500 was 19% off its February high by April. Since then, the index has rallied 30% and is back to making new all-time highs. Investors that pay too much attention to the markets may be asking why they didn’t invest more in Nvidia stock which is up 80% from the bottom.
The answer is that picking stocks is hard. At this point it may seem that Nvidia is an unstoppable juggernaut. It’s up 80% since the “Liberation Day” drawdown, but so is Dillard’s. Yes, Dillard’s, the venerable department store has nearly doubled without a daily feature on CNBC or speculation on how they’re using AI. Typical of investment-folk, I have cherry-picked this data. Zooming out, Nvidia is up 1,160% over the last five years. What has Dillard’s done over the last five years? It’s up over 2,000% as is Build-A-Bear stock. I’m not trying to say that AI will never learn to stuff a bear, just that it is difficult to know what stocks will do well or why.
Someone said the market exists to make as many people look foolish at one time as possible. So what do we do when the market moves against us (sometimes sharply) in the short term? Stick to the plan. The market may exist to make people look foolish, but it also rewards patience in predictable ways. Diversification and low-cost passive investments work without having to pick stocks or sectors. It’s as flashy as a department store, but as dependable as your favorite fall beverage.
Market Commentary Disclosures
Fairway Wealth Management LLC (“Fairway”) is an SEC Registered Investment Adviser. Registration does not imply an endorsement of the firm by securities regulators nor does it indicate that the adviser has attained a particular level of skill or ability.
This post represents the opinions of Fairway as of the date indicated and may contain forward-looking statements, predictions and forecasts. Forward-looking statements necessarily involve risks and uncertainties, and undue reliance should not be placed on them. There can be no assurance that forward-looking statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Past performance is no guarantee of future results. Market conditions can vary widely over time and can result in a loss of portfolio value.
This post is prepared using third-party sources. Fairway considers these sources to be reliable; however, it cannot guarantee the accuracy or completeness of the information received. This information is educational and general in nature and is not intended to be, nor should it be construed as specific investment, tax, or legal advice. Charts are provided for the illustrative purpose of general market commentary. No client or prospective client should assume the above information serves as the receipt of, or substitute for, personalized individual advice.
