| Areté Quarterly Q125 |
Business update
The news the last few weeks has been focused on tariffs, tariff rates, tariff exemptions, and tariff negotiations. If you haven’t checked the news in the last twenty minutes, you’re behind. You may have even missed a move of a few percent in the market. Indeed, it is exactly this type of uncertainty that leads me to start every quarterly report off with the preface:
“As it becomes progressively more apparent that the investment landscape presents unique challenges, it is also becoming progressively more apparent that conventional investment approaches are not sufficient for meeting those challenges.”
The heightened level of uncertainty only captures part of the set of “unique challenges” though. This is about way more than a couple of bumps in the market; this is about a fundamental re-ordering of geopolitical and public policy priorities.
The biggest and most notable impact will be on US financial assets. These assets have been beneficiaries of a truly exceptional set of tailwinds. One of those tailwinds was the persistence of low volatility, which was super-charged by public policy.
Low volatility not only created a sense of low risk, but also allowed market participants to aggressively increase leverage.
Such highly leveraged positions, however, are incompatible with the much higher level of uncertainty manifesting under the Trump administration. Higher uncertainty forces deleveraging, although it can be in either an orderly or disorderly manner.
Not only is this problematic for US stocks and bonds in particular, it is problematic for portfolios that have a high exposure to US public capital markets and/or financial engineering. This includes private equity, venture capital, real estate, and most hedge funds.
In other words, most portfolios that claim to be diversified, aren’t diversified at all. This is going to be an enormous problem for a lot of portfolios, but it is also a problem the Areté All-Terrain allocation strategy is designed to solve.
Finally, I expect a lot of people will get this wrong. I also expect a lot of people to get distracted by the unimportant details of various policy prescriptions. I also expect a lot of people will be very reluctant to embrace the new, much harsher reality.
However, for those who are willing to keep an open mind and who recognize the need for a different investment approach, Areté is here to help avoid a lot of pain and to show up when it is needed most.
If you have any questions about what I do, about the transition to Altruist, or just want to learn more about the All-Terrain strategy, please reach me at [email protected]. I look forward to it!
Thanks for your support!
David Robertson, CFA
CEO and founder, Areté Asset Management
The news the last few weeks has been focused on tariffs, tariff rates, tariff exemptions, and tariff negotiations. If you haven’t checked the news in the last twenty minutes, you’re behind. You may have even missed a move of a few percent in the market. Indeed, it is exactly this type of uncertainty that leads me to start every quarterly report off with the preface:
“As it becomes progressively more apparent that the investment landscape presents unique challenges, it is also becoming progressively more apparent that conventional investment approaches are not sufficient for meeting those challenges.”
The heightened level of uncertainty only captures part of the set of “unique challenges” though. This is about way more than a couple of bumps in the market; this is about a fundamental re-ordering of geopolitical and public policy priorities.
The biggest and most notable impact will be on US financial assets. These assets have been beneficiaries of a truly exceptional set of tailwinds. One of those tailwinds was the persistence of low volatility, which was super-charged by public policy.
Low volatility not only created a sense of low risk, but also allowed market participants to aggressively increase leverage.
Such highly leveraged positions, however, are incompatible with the much higher level of uncertainty manifesting under the Trump administration. Higher uncertainty forces deleveraging, although it can be in either an orderly or disorderly manner.
Not only is this problematic for US stocks and bonds in particular, it is problematic for portfolios that have a high exposure to US public capital markets and/or financial engineering. This includes private equity, venture capital, real estate, and most hedge funds.
In other words, most portfolios that claim to be diversified, aren’t diversified at all. This is going to be an enormous problem for a lot of portfolios, but it is also a problem the Areté All-Terrain allocation strategy is designed to solve.
Finally, I expect a lot of people will get this wrong. I also expect a lot of people to get distracted by the unimportant details of various policy prescriptions. I also expect a lot of people will be very reluctant to embrace the new, much harsher reality.
However, for those who are willing to keep an open mind and who recognize the need for a different investment approach, Areté is here to help avoid a lot of pain and to show up when it is needed most.
If you have any questions about what I do, about the transition to Altruist, or just want to learn more about the All-Terrain strategy, please reach me at [email protected]. I look forward to it!
Thanks for your support!
David Robertson, CFA
CEO and founder, Areté Asset Management
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