Tilting Landscapes
1st Quarter 2025 Commentary • Kori Allen, CFP®
The first quarter of each year has us elbow deep in evaluating and documenting our practice – Pearl Wealth. Like you, it’s tax time, and we prepare our documents for the accountant – then comes review and filing. Alongside the prep we analyze our expenses and budget against revenue projections. All very ordinary but grounding. Our regulatory filing is due no later than March 31st of each year. This entails verifying our adherence to ethics, policies and procedures mandated by the Securities and Exchange Commission (SEC), as well as disclosing the number of clients, accounts, amount of assets under our care, and how they are invested. The review, attestations and documentation are compiled into four filings that generate about 75 pages.* This is also ordinary, but maybe not grounding. (We praise our consultants for their guidance.)
The new president began his term during this same period. Much has been promised about dismantling regulations and becoming more efficient. Rules and regulations may be changing at the regulatory body that governs us: The Security and Exchange Commission (SEC). The last administration’s SEC scrutinized firms who invested with and advertised their environmental, social and governance discipline. Their goal was protecting the investor and ensuring that if a firm truly was investing this way, it was methodical, financially material and documented. Our investment discipline predates the usage of the terms and acronym, and we’ve seen over market cycles that this approach can provide a better return by managing risk. It has been financially material. Included in this discipline is also a review of the breadth of representation in a company, the management and the board. Study after study shows companies are more profitable when their composition reflects their consumer.
In the past, the SEC focused on protecting the investor and now, with deregulation, the belief is it will be protecting the company from constraints. The US is no longer part of the Paris Climate Accord; multiple words that might describe our values, our investment discipline, and our loves are being removed from government websites. In some circles empathy is seen as a weakness.
During Perestroika, under Gorbachev, the Soviet Union was going through tremendous change politically, socially and economically. Citizens lived a dual reality. Sociologists call this “normalized abnormality” or “hypernormalization.” In this dual existence, people carried on with their daily life—grocery shopping, going to movies, vacationing, etc.—despite the profound changes around them. The extraordinary and ordinary coexisted. Familiarity grounded them. The process of abandoning hypernomalization ranged from pragmatic to traumatic, depending upon a person's standing and vestment in the institutions or culture that had changed.
It is impossible to know in the moment if one is living in a dual existence or if the disorienting activity around is transitory. The same holds true for the markets.
Many US companies, especially those focused on artificial intelligence (AI), were bid up and had become overvalued due to speculation or possibly over-optimism. In the past recent months stocks started falling after news that the Chinese have developed an AI model that consumes less energy and runs more efficiently. In this AI euphoria, other parts of the US stock markets became over-valued as well. Using past earnings expectations, there is still room for US markets to drop to more average historical valuations. We know that markets regularly correct as part of a normal cycle. We won’t know how much of this correction is related to healthy market dynamics, to tariffs, to concerns over recession and depressed consumer sentiment, or any fundamental shift in the United States financial systems until after the fact.
Despite our tilting landscapes, little changes for us, except perhaps an extra time out, more chocolate or memes that make us laugh.
We may change our language to avoid certain words, but our convictions are the same. Investment principles remain:
Identify and invest for all your goals and ignore short-term turbulence.
Do not invest in a volatile asset, like stocks, if you expect to need the funds within 5 years.
Diversification can smooth a bumpy ride and capture opportunities for growth or safety.
Investing in well-run companies that care about the world and the people in it, generally provide returns with less surprises.
Opportunities can arise in down markets.
We are grounded in fiduciary standards of always putting our clients interest ahead of our own, regardless of administrations or regulations (or the absence of them).
When markets roil, it’s grounding to remember some of Warren Buffett’s wisdom:
“Time is the friend of the wonderful company, the enemy of the mediocre.”
“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”
“The stock market is a device to transfer money from the impatient to the patient.”
*Any of our regulatory filings are available on-line or upon request.
The views expressed represent the opinions of Pearl Wealth, LLC as of the date noted and are subject to change. These views are not intended as a forecast, a guarantee of future results, investment recommendation, or an offer to buy or sell any securities. The information provided is of a general nature and should not be construed as investment advice or to provide any investment, tax, financial or legal advice or service to any person. The information contained has been compiled from sources deemed reliable, yet accuracy is not guaranteed.
Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC’s Investment Adviser Public Disclosure website. www.adviserinfo.sec.gov.
Past performance is not a guarantee of future results.