Category: Letters

A grounded take on the current bull market, investor behavior, and the long-term promise of AI.

The S&P 500 may be hitting new highs, but the best value could lie in smaller, overlooked companies. Explore our 2025 small cap investing outlook, why these stocks may outperform, and how we’re positioning portfolios for quality, diversification, and long-term growth.

I recently reviewed the latest version of President Trump’s tax proposal, informally branded the “Big Beautiful Bill” and officially titled the One Big Beautiful Bill Act. While the name sounds more like theater than policy the proposed bill has some large ramifications for all of us.

We have experienced a benign 2025 so far despite a correction in the stock market and higher volatility. Modest stock allocations and gains in insurance stocks (our single largest industry exposure), gold, and newer fixed income buys have buoyed account values.

As far as investments and what's going on today, I'm still sleeping just fine. I think you should, too. The roadmap laid out in previous letters has been followed. Stock levels are low, and what we have is outperforming overall.

The 27th Sony Open, Hawaii’s only annual professional sporting event, concluded last week at Waialae Country Club, and what an incredible event it was!

2024 was another good year for stocks overall thanks to continued strength in just a handful of the largest technology and internet companies. The famed “Magnificent Seven” once again comprised the bulk of stocks’ overall returns.

Returns this year have been kinder than I would have expected given our rather conservative positioning. Stock allocations have been lower than usual, with little in information technology and internet-related stocks, two areas that have accounted for the lion’s share of the stock market’s returns in recent years.

Acknowledging the role of luck is essential, especially when reflecting on our own paths. It’s a reminder that circumstances beyond our control play a significant role in shaping our lives.

Despite several requests, I have been remiss in posting the note I had to submit with my induction into Harvard’s Varsity Club Hall of Fame back in November. They ask awardees to write some reflections on their college experience.

Capital markets in 2023 showed investors’ resilience—or was it complacency? Clearer was yet another lesson on the dangers in following forecasts, especially those of policymakers, PhDs, and Wall Street strategists. The Fed’s interest rate hikes and tough inflation talk didn’t cause an “inevitable” 2023 recession after all.

It can’t be overstated how powerful ultra-low interest rates have been for asset prices and wealth accumulation over the past four decades—and the bubbles. But perhaps it is now time to think how unsustainable constant intervention and stimulus are, despite government’s good intentions.