Resources/Weekly Insights

Volume 14, Edition 19 | June 9 - June 15, 2025

Your Portfolio, Slow-Cooked and Delicious

Doug Walters, CFA

Food has been on our mind following our latest Life by Design podcast with chef Matt Abdoo. With all the questionable ingredients being pushed on individual investors, particularly in the private markets, we thought it worth a reminder to stay vigilant.

Contributed by Doug Walters, David Lemire, Max Berkovich, Matthew Johnson

We’ve had a delicious couple of weeks at Strategic. Our long-anticipated client appreciation party brought great company, great conversation, and yes—great food. To top it off, last week’s episode of our Life by Design podcast featured Chef Matt Abdoo, a BBQ master, restaurateur, and longtime friend of the firm. If it seems like we’ve been talking a lot about food lately, it’s because we have. But behind all the brisket and beer, there’s an investing lesson simmering under the surface.

Good barbecue takes time. It’s less about secret sauces—and more about quality ingredients, steady heat, patience, and letting the smoke do its work. It’s a process. And in many ways, that’s how we approach investing: no shortcuts, no gimmicks, just disciplined, evidence-based decisions.

Contrast that with the onslaught of private investment hype and products that are hitting the market today, promising quick wins. Private equity, private credit, private real estate may look like filet mignon on the outside, but cut into it, and you’ll find hamburger if you’re lucky, and “beef parts” if you’re not.

We talked about the complexity of alternatives a couple of weeks ago, so why are we hammering on this topic once again? It seems likely that individual investors are about to get hit with an onslaught of private investment options that are not likely to be in their best interest.

There are two colliding forces…

First, there is a growing list of fund structures giving some form of access to private investments to individual investors. The industry needs more buyers, and they are coming for us.
Second, the “smart money” as it is called, are needing to exit. Lagging performance of alternatives, plus funding pressure at endowment behemoths like Yale and Harvard, are causing large-scale private investment exits.

The exodus will only increase the urgency to push product down to the individual investors. Data shows that the endowments, despite their big research teams and preferential pricing, were unable to get excess performance from private investments¹. Individual investors will likely fare worse.

But don’t private investments have excellent performance, you ask? Let’s just say there is a lot of misinformation out there. The IRRs (internal rates of return) touted by the industry are not the same as the returns you receive as an investor. They are easily manipulated, and small early wins can lead to distorted and misleading long-term performance.

So, while private investments have an allure and mystique that attracts the attention of the individual investor, we say buyer beware. These high-fee products are great for the wallets of the general partners that issue them but are likely not in the best interest of most individual investors. Wealth accumulation is not about shortcuts and status symbols. It is about a long-term record of making wise, evidence-based decisions.

1. Ennis. 2025. “The Demise of Alternative Investments,” March 21, 2025 (forthcoming in Journal of Portfolio Management)

2.4%

CPI Inflation

Inflation came in slightly below the 2.5% anticipated. Signs of tariff’s impact on pricing is still allusive in the numbers.

Headline of the Week

Balancing the Mandates

As the Federal Reserve prepares to meet next week—widely expected to hold interest rates steady—the outlook beyond that meeting has grown increasingly uncertain. Recent inflation data has come in lower than anticipated, but the full impact of newly imposed tariffs remains unclear. While, some troublesome aspects of inflation like housing costs have finally started to decline, the tariff impact on prices seems delayed. As a result, the annualized inflation rate over the past three months has fallen well below the Fed’s 2% target.

Meanwhile, the labor market is showing early signs of softening. Many employers, still mindful of the pandemic-era labor shortages, are hesitant to lay off workers. However, hiring has slowed, and recent job numbers have been revised downward. Policy uncertainty continues to weigh on employment, as does the growing potential for artificial intelligence to dampen labor demand.

The Fed’s current stance is to keep monetary policy restrictive until inflation is firmly under control. But if the labor market’s wobble turns into a stumble, the central bank may face a more complicated balancing act between its dual mandates of price stability and maximum employment.

The Week Ahead

The world may stay focused on the latest blaze in the Middle East, which will distract investors from central bank activity. The Bank of Japan (BoJ), Bank of England (BoE), People’s Bank of China (PBoC) and of course the Federal Reserve (Fed) will all have rate setting meetings in a holiday shortened week. A G7 meeting may also receive some attention.

Stuck in Place

Neither the BOJ, BOE nor the Fed are expected to change policy this week. However, investors will be watching closely to see what the future might bring.

The Federal Reserve will release a Summary of Economic Projections, which should paint a more vivid picture of what the policy makers are seeing in the economy.
Markets still expect a cut this year from the Fed.
The Bank of Japan with its big balance sheet is expected to offer some color on how they will manage their tapering in the face of suddenly rising rates on the 30–40-year bonds.
Unless something changes when the United Kingdom reports inflation before the central bank decision, expectations are for no change in rates from the BoE as well.
Sweden, Norway, and Switzerland also have central bank meetings.
While Norway is expected to be on hold, Sweden is expected to make a trim and Switzerland is expected to make a cut, with an outside chance of a ½ percent move.

On the Side

Canada will be the host of the summit of the seven major world powers.

While the G7 consists of United States, Canada, France, Germany, Italy, Japan and United Kingdom, Canadian Prime Minister has invited Australia, Brazil, Indonesia, Mexico, South Africa, South Korea, UAE, India, and Ukraine to attend.
With a robust list of attendees in a time of many global conflicts, the sideline discussions will be trade/tariff related.

Holidays

Thursday is the observance of the newest national holiday Juneteenth.

Markets and Banks are closed that day.

Sunday is also a holiday!

· Happy Father’s Day!

About Strategic

Founded in 1979, Strategic is a leading investment and wealth management firm managing and advising on total client assets of over $2 billion.

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