November 20, 2025: We’ve completed our move to another state and I should be back to updating this blog more regularly as a consequence.
As we slowly slide into a more distinctive stagflationary scenario resulting from an internal supply-side shock caused by increased tariffs, the Fed is increasingly uncertain as to whether it should focus on the deteriorating economy through interest rate cuts, or the increasing inflationary outlook through interest rate increases. Recently, it has focused on the deteriorating economy while at the same time lamenting it’s inability to simultaneously address tariff caused inflation. (By contrast, the Fed can directly fight a demand-side induced, deflationary recession by decreasing rates and increasing the money-supply.)
Given the weakened state of the economy caused by Trump’s tariffs and the resulting supply-chain disruptions, it appears best to generally stay invested to capture any possible market upside while simultaneously reducing downside exposure. The rationale is that we cannot say with certainty the the market is in an overbought or AI bubble, but recent NVIDIA earnings suggests that the AI bubble worries may be a bit overblown. Instead, the psychological FOMO phenomena is probably the mistake most investors should concern themselves with. Instead of FOMO investing, the action to take now is to gradually begin rotating out of your aggressive holdings in equities and any investments that use high amounts of leverage. Also, consider rotating into investment grade fixed income investments and increasing your cash balances. For cash balances, I would suggest a fund like BOXX, for example.
If you still want to buy equities, focus on those that are highly rated such as: ARMN, TREE, SANM, CRMD, SNDK, NRDS, UNFI, HRTG, and KROS, for example. For those wanting solid investments with dividend growth, consider: CION, TIMB, AEG, APAM, BAP, LAZ, PINE, and POR. For those wanting to know the 5 best performing ETFs over the previous three months, this list is comprised of: SHOC, SMH, VHT, XLV, and PTF. As always, good investing!
