A Thanksgiving Market Update & Portfolio Review

Dear Clients and Friends,

Thanksgiving offers us a brief moment to tune out the noise of the markets and reflect on the relationships that define our work together. Serving as the steward of your family’s wealth is a privilege I hold dear, and I am deeply grateful for the confidence you place in me. This season serves as a welcome reminder that while economic landscapes may shift, the strength of our partnership and our shared commitment to your long-term goals remain the steady constant.

I wanted to take this moment to share a brief update on the economy, review how your portfolio has weathered the unique challenges of 2025, and outline our thinking for the year ahead.

The Economic Landscape: Navigating a Year of Disruption

2025 has been a year of resilience, but also one of significant friction. While third-quarter GDP grew at a solid 2.7%, the economy is currently digesting several major structural shocks that have introduced new uncertainties for 2026:

• The Consumer is Tapping the Brakes: We are seeing the first concrete signs of a slowdown. The Conference Board’s Consumer Confidence Index dropped sharply in November (falling to 88.7), and retail sales growth has cooled significantly (just 0.2% growth last month). Combined with a softening labor market—where the unemployment rate has ticked up to 4.4% and job openings are becoming scarcer—it is clear that the “average” American family is tightening their belt heading into the holidays.
• Fiscal & Political Headwinds: We are just emerging from a historic 43-day government shutdown. While the government is now funded through January, the resolution left key issues unresolved—most notably, the expiration of ACA (Affordable Care Act) subsidies. If these lapse at year-end as scheduled, millions of Americans could see healthcare premiums double, further dampening spending in Q1 2026.
• Federal Restructuring (“DOGE”): The aggressive cost-cutting measures by the Department of Government Efficiency (DOGE) have led to widespread reductions in the federal workforce. While intended to streamline operations, the sheer scale of these firings has disrupted federal contracts and introduced volatility into labor data.
• Trade Tensions: Renewed tariff policies—and retaliatory measures from trading partners—are keeping inflation “sticky” at around 3.0%. This complicates the Federal Reserve’s ability to cut rates further.

Portfolio Performance: A Global Success Story

Our portfolios are constructed to be an “all-weather” vehicle, designed to find growth even when the U.S. headlines are dominated by political strife. This year, that diversification paid off in a major way, particularly in areas many investors ignored.

The Standout Stars: International Value

Despite the headlines regarding tariffs and a strong dollar, our international holdings were the clear winners of 2025. 

This validates our belief that starting valuations matter more than political rhetoric. 

As the gap between expensive U.S. stocks and cheap international stocks began to close, our specific exposure to “value” and “profitability” factors surged:

• International Small Cap Value: Skyrocketed +43% YTD.
• International Large Cap Value: Delivered an impressive +36% YTD.
• Emerging Markets Value: Returned +27% YTD, shrugging off trade concerns to deliver robust growth.

Core Performers & Alternative Winners

• Long/Short Equity: A standout performer, up over 18% YTD. Its active management style successfully navigated the volatile equity landscape, outperforming the broad market indices.
• Gold Miners: With central banks buying gold at record rates to hedge against U.S. fiscal uncertainty, our miners’ exposure saw exceptional growth, up 30% since we entered a position over summer.
• US Wide Moat Equity: Our anchor position in high-quality U.S. companies with sustainable competitive advantages returned a solid 11% YTD. While it didn’t chase the most speculative highs of the AI bubble, it provided reliable double-digit growth and stability in the core of your portfolio.
• Income Anchors (FORAX & CAPIX): In a volatile yield environment, our private credit and real estate debt strategies delivered consistent returns in the 9% range YTD, acting as the ballast in your portfolio.

Areas of Divergence

• Commodity Managed Futures: This strategy remained flat for the year. Despite rising commodity prices generally, the market trends were incredibly choppy—whipsawed by tariff headlines and geopolitical announcements. This lack of sustained momentum made it difficult for trend-following strategies to capture gains. However, we retain this position as insurance; it remains one of the few assets that historically spikes when traditional markets crash.
• COWG (Large Cap Cash Cows Growth): High-quality U.S. cash flow companies returned only 4.1% YTD. In a U.S. market driven almost entirely by speculative momentum, this “middle ground” of disciplined quality was temporarily neglected. We believe these companies remain the most prudent hold as the economy slows.

Looking Ahead: Positioning for 2026

As we look toward the new year, we remain confident in the resilience of the global economy, but maintain a cautious outlook.

The combination of expiring ACA subsidies and the ripple effects of the DOGE restructuring suggests we should prepare for “rocky” markets in early 2026.

In addition, the US stock market is dominated by intense concentration risk in the top 10 stocks – more so than any other time in history, including 2000 and 1929, which were followed by major stock crashes and extended bear markets.

Maintaining our “all weather” allocation is particularly crucial at this time.

We have successfully captured massive upside in foreign equities and in hard assets, while maintaining a defensive core position and necessary insurance allocation. 

We believe this balance is critical as we enter a year likely defined by slowing consumer spending and continued political friction. 

As we approach year-end, it is an excellent time to ensure your financial plan remains aligned with any changes in your personal life or liquidity needs for 2026. If you envision any changes in your situation, feel free to set up a time to connect over the few weeks.

Thank you again for your continued partnership. I wish you and your family a Thanksgiving filled with warmth, joy, and abundance.

Warmly,

Nirav Desai