The Legacy Perspective - April 2025
By Steve Wachs, CFP®
For several years, I have been fortunate to attend the JP Morgan Wealth Management Symposium. Besides hearing presentations from economists and investment strategists, the speakers included well-known authors, political figures, and sports legends. This year’s gathering was a few weeks ago in New York City and included 130 investment advisors from all over the United States.
Tariff talk was front and center as that was the week of the “90 day pause” announcement. Many of the presenters had prepared slides a few days earlier and they now were out of date. Dr. David Kelly, JPMorgan Global Strategist, titled his presentation, “Riding Out the Policy Storm.” The word that he and many of the speakers uttered was “uncertainty.” Andrew Norelli, Managing Director Fixed Income at JPMorgan stated, “this market defies analytics.” Dr. Kelly’s biggest concern was the impact of a slowing U.S. economy as companies hold off on capital spending until a clearer economic picture has been painted. Should unemployment pick up and consumers reduce spending, the threat of a recession would become real. Jamie Dimon, CEO of JPMorgan Chase, visited with President Trump earlier that week, stated that the antidotes he hears are bad, and reality is not much better. Although he spoke the day that JPMorgan Chase announced earnings that had exceeded expectations (revenue of $46 Billion), he is “waking up at 3:30 am and is speechless over this sh___.”
What do we do from an investment management standpoint with all this “good news?” We want to share a couple of charts that may offer insight. The first illustrates what happens with the “set it and forget it” style of portfolio management. A portfolio with 40% allocated to fixed income (bonds) and 60% to equities in 2019 drifts to 27% fixed income and 73% equites at the end of this past quarter as equites increased tremendously in value in 2023 and 2024. This concept of “letting the winners run” works well until it doesn’t, and you end up with a portfolio with more equity risk and more volatility. That is why we reduced equity exposure over the past 2 years; particularly in the 4th quarter of 2024. We did not know what the future would hold, but we did know that capturing gains and maintaining your goal allocation is a key to our investment process.
The second chart was provided by Michael Cembalest, Chairman of Market and Investment Strategy for JPMorgan Private Bank. Through the years in listening to and reading his remarks, he can be direct and paint a negative picture of the world. Cembalest states “Lower prices solve a lot of problems for investors.” It was interesting he chose the following title of this slide “In a correction, the best catalyst for investors is always lower prices and the threshold investors need in the face of a lot of unknowns.” This chart shows the result of investing in the S&P 500 Index each day after a 15% correction. Bottom line – the returns were positive 83% of the time with a mean return of 12%. Will that be the case this time? We don’t know, but what we do know is now is not the time to sell. Hopefully these charts and numbers provide a perspective of how we think about and take action during times of financial uncertainty and market volatility.
Steve Wachs & the greatest running back of all time, Emmitt Smith
It was not all economic and investment speakers. I shared with the Legacy team the scariest presentation was by Johnathan Haidt, the author of "The Anxious Generation." Haidt makes a strong case of how smart phones and social media has resulted in "the great rewiring of childhood leading to forms of mental illness for many teen children." One of the final presenters was Emmitt Smith, the Hall of Fame running back for the Dallas Cowboys. You can see from the picture with Emmitt that we have become "good friends" in the 10 seconds we were together for the picture. He regaled us with lessons from the Cowboys Super Bowl championships teams - I explained to Jeremy, my 32-year-old son, that was not a fantasy as it really did happen. Emmitt also shared about his successful career as a real estate developer (learning from Roger Staubach) after his retirement from football. When asked what his key to success was, he shared the following quote from his high school coach, "Never be satisfied with anything. That's when the growing stops." That is a lesson we take to heart at Legacy as we continue to discover ways to better serve and advise you from a financial and investment planning standpoint.
Disclosures
Legacy Consulting Group is registered as an investment adviser with the SEC and only conducts business in states where it is properly registered or is excluded from registration requirements. Registration is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability.
Information presented is believed to be current. It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. You should consult with a professional advisor before implementing any strategies discussed.
All investments and strategies have the potential for profit or loss. Different types of investments involve higher and lower levels of risk. There is no guarantee that a specific investment or strategy will be suitable or profitable for an investor’s portfolio. There are no assurances that an investor’s portfolio will match or exceed any particular benchmark.