By: Matt Garrott
The S&P 500 Total Return Index rose 8% in the third quarter, bringing returns to almost 15% on the year. Taxable bonds saw a 2% increase while municipal bonds rebounded 2.5% as supply and demand dynamics normalized. As usual, pessimistic headlines were more noise than signal.
The S&P 500 has compounded meaningfully over the last few years. The index is up 25% annualized over the last three years and 16.5% annualized over the last five years. If market returns were closer to 3% annualized over the last few years instead, savvy investors would be asking whether to add to equities after a stretch of below average years. With returns elevated today, the mirror image of that question is whether they should trim equities. JPMorgan’s Michael Cembalest sums up today’s market well: “Oracle’s stock jumped by 25% after being promised $60 billion a year from OpenAI, an amount of money OpenAI doesn’t earn yet, to provide cloud computing facilities that Oracle hasn’t built yet, and which will require 4.5 GW of power”. It certainly feels bubbly.
The problem is that feels-driven market timing destroys wealth. What does the financial plan say instead? Is the portfolio overweight? Underweight? Portfolio trading should rely on policy, not vibes. That means rebalancing instead of timing. We recognize that peace of mind does matter. Thoughtful rebalancing achieves this, taking advantage of the benefits of diversification without the anxiety of timing the market. Rebalancing overweight positions likely means realizing some gains. Our philosophy is to minimize taxes, not to pay zero taxes. We don’t want the tax tail to wag the dog.
When markets are at highs or lows, investing becomes a topic of small talk like the weather or the Guardians’ historic division championship push. We strive to communicate proactively and welcome any questions, whether market-related or personalized to your situation and plan. Take advantage of our expertise. Your peers likely have similar concerns and we have capacity to do for them what we’re doing for you. An email introduction is an easy way to connect.
Fairway has been busy outside of the investment markets. We hired Ben Perelka, one of our summer interns, and Carter McAbier, both recent Ohio State graduates. Mark Weiskind was featured in an article in Cleveland Jewish News and sat for an interview on the Meet the RIA podcast for Asset TV. Fairway also ranked 135 on the Forbes 2025 America’s Top RIA Firms list. If you haven’t already, consider following Fairway on LinkedIn and Facebook, where we regularly post updates about activities and accolades happening within the firm.
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.
