Preparing for 2025

Dear Clients and Friends,

Happy New Year!  

This year I spent the first of the new year in a hotel room in Tangier, Morocco recuperating from the flu. Not exactly the majestic and intriguing start I had anticipated, but as my mother loves to say, “God laughs when we make plans”. It’s a funny thing to hear in the back of your head as you tell the world you are a financial planner.  

Most financial firms take the beginning of the year to predict the future year ahead. I have no predictions, but I do have a strong sense there is volatility ahead. The geopolitical world is simmering and at times boiling over with regional wars, most of which the United States are fighting directly or indirectly. I feel AI is just warming up, and despite the best laid plans by the incoming administration, there are few who believe that the changes they propose will go smoothly.  

At the same time, it is important to note that we have enjoyed the most incredible, albeit uneven, prosperity since the Great Financial Crisis of 2008/9. Wages are up, accounts are up and, in truth, most people are paying less in taxes than before. Over the last three years the S&P 500 is up 28.5% with an annualized return of 8.94%.ⁱ

These two dichotomous worlds were in my head the final day of my trip when I was fortunate enough to get out of the hotel for one day to visit Cap Sparta – the African vantage point of where the Mediterranean Sea meets the Atlantic Ocean. It was a sunny day, a few white caps were on the water, and I sat in the grass just happy to be alive and not have a fever. I don’t know why but for some reason I thought I would see waves crashing against rocks and a tempestuous sea bubbling and twirling. Instead, the water met peacefully and co-existed as one. If I did not know this was the connective tissue between these two bodies of water, I would just think it was an open waterway or safe port.  

Then it hit me – there really is no such thing as the “Mediterranean Sea”. It is just a name for a part of the big body of water we named the “Atlantic Ocean”. It is really all just one body of water – why wouldn’t it peacefully flow from one to the other?  

And if this were true, perhaps the transition of time between 2024/2025 - also a man-made distinction - could flow seamlessly. And perhaps 2025 can be a year of chaos and prosperity together, just as the past year has been.  

That thought and the Mediterranean sun warmed my cold bones; I was finally shaking off the chills. However, that thought is not enough to manage an investment practice. So, despite my mother’s adage, we are planning for 2025. We are reviewing our holdings and stress-testing our portfolios against interest rate changes and inevitable corrections.  

Our confidence is boosted by our cash-flowing bond allocations for our clients, and we continue to own individual stocks that we have personally researched and feel confident in. We love everything we own and know why we own it. We are optimistic that despite the chaos that could easily ensue this year, it is highly probable that the markets and economy will continue to grow. But we are also wise enough to know that anything can happen, so we have planned accordingly.  

We look forward to meeting with each and every one of you to review your goals and ensure we are investing for your continued success.  

Our best to you for the coming year!