Investment Policy Committee Update - November 2025

Remaining steady in our mission for more than 20 years, our Investment Policy Committee (IPC) focus is to produce a more consistent rate of return. This, in turn, allows our clients to sleep at night, regardless of what crazy things may be happening in the world. To accomplish this, we focus not only on upside gains but on downside risks and allocate investments proactively based around economic and business cycle conditions. For tactical opportunities, our Core Allocations, often associated with retirement accounts to avoid tax implications, are often rebalanced 4-6 times a year. Our November rebalance focused on our Core Allocations to take advantage of a shorter term pull back in the markets.   

Continuing to Climb the Wall of Worry
Developments in 2025 created a constructive environment for risk assets, and after the early Liberation Day Tariff pullback, the stock market has continued to move higher. The last few weeks the undercurrents of the markets have shown quite a bit of uncertainty. From our perspective, there appears to be a disconnect between what is generally positive economicdata and what the average American is experiencing. Add to that confusion over the path of the interest rates, the voting members of the Fed, and whether the incredible amounts of spending on AI will translate into revenue sufficient to justify the investment. These three themes have helped to propel the stock and other risk asset rally over the last two years and recently, traders have been starting to question these tenets; and the path forward. 
 
We wanted to take advantage of this uncertainty and last week we implemented a rebalance for our Core allocations. Being mindful of risk, we continued our ‘barbell approach’; leaning into the sectors where we have conviction, while adding to defensive sectors as well. 

Buying the Dip
After the recent pullback in stocks, we increased our equity overweight from 1% to 3%, reflecting our positive outlook for stocks that is supported by a constructive macro-economic backdrop of cooling inflation, robust earnings, and an improved fiscal and trade policy outlook. A good Q3 earnings season, a more accommodative Fed, and a generally friendlier liquidity backdrop back our logic for staying constructively tilted toward risk. With inflation’s "sticky" components beginning to roll over and multiple economic forecasts projecting 4% real GDP growth in Q4 and the first half of next year, we feel the macro-economic setup supports the increase toward stocks, especially after the recent pullback. 

What about the AI Bubble? 

This brings us to the 10 trillion-pound gorilla in the room: AI. If an investor didn’t own AI as defined by the ‘Magnificent 7’ over the last few years, returns are much less exciting. In our view, the AI "bubble" chatter is mostly noise, reflecting oversimplified analysis. We are highly attentive to industry risks, but what we see looks far less like a speculative mania and much more like a durable, cash-flow-funded investment and productivity super-cycle. Cash flows and balance sheets for the ‘Mag 7’ are very different than the dot-com era of no earnings .com stocks. The rapid build out of data centers and infrastructure is being paid for by staggering cash flows from some of the most profitable companies in market history, racing to meet voracious, real-world demand for computing power. With data center vacancy rates at record lows and nearly every available GPU being snapped up, the risk likely isn't overcapacity but underinvestment and energy constraints. Yes, many of these companies have higher valuations; however, a decade of 35% compound annual earnings growth is why they are in the ‘growth’ stock category and have the price premium. 

Our focus on the U.S. mega-cap and momentum themes naturally tilt us more toward the tech titans. As such, AI is the theme that keeps on giving and continues to anchor our portfolio’s growth engine – for now. This rebalance also brought an addition to Emerging Markets. This addition is designed to capture the semiconductor supply chain playing out across Taiwan and South Korea.  

Hedging enthusiasm responsibly.  

To keep the equity side of the portfolio balanced, we are tempering our growth bets with an increased stake in U.S. value. Consider the addition of value a risk control; a deliberate counterweight to the high-growth theme. The value add softens our style concentration, ensuring we’re not overly exposed to single factor risks – layering in value as a deliberate counterweight to our cluster of growth bets. 
 
During this rebalance, we also deepened our underweight to developed ex-US stocks. We did this by reallocating to companies with superior earnings in the U.S. and the increasingly tech-centric bourses of Emerging Markets. Our logic was backed by stabilizing trade dynamics. 

If the U.S. and Emerging Markets are the engines of global AI infrastructure growth, the developed ex-U.S. market may be the old station wagon clunking down the road. While the region’s valuations may appear reasonable (don’t they always?), they don’t look good when it comes to earnings growth and exposure to the defining technological shifts of our time. Because of this, we’re moving further underweight accordingly. 

Streamlining Fixed Income 

During this rebalance we also streamlined our fixed income positioning. For more aggressive allocations we reduced overall bond exposure by 1% and for more conservative allocations (less than 50% stock), we began to upgrade fixed income holdings. For the upgrade, we added exposure designed to adjust with changing market rhythms and hunt for better-valued credits, while keeping overall duration / maturity close to neutral. Looking forward, With the inflation scare of 2022 mostly in the rearview mirror, we are continuing to exit inflation-sensitive bond positions and consolidating into a more nimble, systematic bond strategy. 

In summary, we continue to remain cautiously optimistic
The Fed’s easing stance continues to support measured risk-taking, so we are taking advantage of the recent pullback in stocks. We continue to maintain diversification as one of our risk management tools, focusing on our high-conviction ideas that tie with where we feel we are in the economic cycle. We will continue to tactically balance offense with defensive ballasts. We believe our investment allocations are positioned to navigate uncertainty while capturing opportunities across sectors, styles, and themes. 

We will continue to provide ongoing updates on our views and investment positioning through regular IPC posts like this one, and as we meet with you. If you experience changes to your financial situation that will change when or how much cash flow you will need from your investments, please let us know right away. In addition, if you have questions about our strategy, please let us know and we will add your questions to our next meeting agenda. While we don’t recommend fixating on short-term market fluctuations, if you would like to check specific investment performance across all your accounts, our online Orion Portal is available 24/7. 

Thank you for your continued trust and allowing us to coordinate your asset management as part of our Family CFO services!