April Showers

If the year had ended on April 8, a diversified equity investor would have lamented negative performance, with stock market indexes down by 10-15%. That was the low point of a six-week market decline that climaxed with a severe selloff following the Liberation Day tariff announcement. In that memorable time, fear and skepticism were abundant. 

September Sunshine

Only six months later, the market mood is very different. Stocks have sprinted higher, back to record highs. Bonds have regained their traditional role as portfolio ballast, with solid performance so far in 2025 and noteworthy steadiness during the stock market slide in March and April. Meanwhile, a weakening U.S. dollar has supported performance of foreign stocks, even though economic conditions abroad have been comparatively soft. It is a timely reminder that trying to “time” markets – whether in stocks, bonds, or currencies – is a guessing game.

Signs of Caution

The stock market resurgence has pushed valuations toward the high end of historical ranges. Of note, the S&P 500 Index is currently valued at almost 23x projected earnings, well above a 70-year average price/earnings ratio of 17. Moreover, a small cohort of very large technology stocks now accounts for an outsized share of the index, a level of stock market concentration that has been a warning sign of exuberance in past periods. Meanwhile, credit spreads (the difference between corporate and U.S. Treasury borrowing rates) are historically narrow, arguably a sign of complacency. All this at a time when government debt keeps climbing, in the US and abroad, leaving less margin for error if economic growth slows or inflation stays above targeted levels.

Historical Parallels

Mark Twain is widely credited with the observation that “History doesn’t repeat itself, but it rhymes.”  A careful investor should ponder this wisdom today. High valuation and very concentrated stock market leadership, buoyed by enthusiasm for artificial intelligence (AI), evokes memories of previous market conditions. The high confidence about AI’s seemingly unstoppable growth arguably “rhymes” with optimism in earlier times: the electronics craze of the 1960s, the “Nifty Fifty” market darlings in the early 1970s, energy stocks in 1980, and the internet bubble of 1999. The aftermath of these periods showed the risk of excessive optimism and validated the importance of thoughtful diversification.

AI is undeniably transformative, and Bartlett is very optimistic about its long-term potential. But we stay sober. Remember January: reports of a cheaper Chinese AI model (DeepSeek R1) sparked a swift, sharp selloff in leading technology stocks, a few declining by almost 20% in just one day. When expectations run hot, even a single headline can prompt a severe shakeout.

Risk Management

Risk awareness drives Bartlett’s portfolio management. We have been rebalancing toward investment policy targets. We think this is disciplined stewardship—buying when fear creates value and paring when enthusiasm stretches it. Thoughtful management is vital to careful financial planning. By keeping allocations aligned with goals and risk tolerance, we hope to increase financial resilience and ensure that long-term objectives are attainable. Long-time readers know of our frequent reminder that “investing is a marathon, not a sprint.” By grounding our selections in realism rather than optimism or pessimism, our investments should participate well in good markets and hold up better than the market in bad times. We want portfolios that are “built to last” – investing not for the next quarter’s mood but for the next decade’s results.

Good News

We are pleased to report that Bartlett was once again included in Barron’s annual Top 100 Registered Investment Advisors and Forbes’ annual Top Registered Investment Advisors list. This is nice recognition for all the advisors and staff who contribute to our fiduciary practice. We won’t rest on our laurels; we are determined to make these lists again in 2026.

Concluding Comments

Bartlett is in the closing stretch of another successful year. We have achieved a client retention rate of 98% thus far, and we have achieved growth in both new and existing client relationships. These accomplishments are possible because of your confidence and loyalty. We are very grateful for your support.

Finally, we hope you will join us for Bartlett’s Fall 2025 Strategy Update webinar on Tuesday, October 14 at 11:00 AM (EDT). Please click the link below to register.

DISCLOSURE

This material provided by Bartlett Wealth Management (“Bartlett”) is for informational purposes only and is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy, or investment product. Nothing in these materials is intended to serve as personalized tax and/or investment advice since the availability and effectiveness of any strategy is dependent upon your individual facts and circumstances. Past performance is not a guarantee of future results. Opinions expressed by Bartlett are based on economic or market conditions at the time this material was written; actual economic or market events may turn out differently than anticipated. Facts presented have been obtained from sources believed to be reliable. Bartlett, however, cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. Any reference to an index is included for illustrative purposes only. Indices are unmanaged vehicles that serve as market indicators and do not account for the deduction of management fees and/or transaction costs generally associated with investable products. The Barron’s Top 100 Registered Investment Advisors list is based on data compiled by Barron’s and includes factors such as assets under management, revenue generated, and the quality of the advisor’s practice. The Forbes Top RIA list is based on quantitative and qualitative data, such as revenue, assets under management, industry experience, and overall quality of practice. Bartlett did not pay a fee to be considered or included on these lists. Inclusion on these lists does not constitute an endorsement and is not indicative of future performance.