Enlightenment - A Herold & Lantern Investments Podcast
Enlightenment - A Herold & Lantern Investments Podcast
Sleep Less, Risk More: Why Monday's Market Dip Demands Clear Thinking
March 10, 2025 | Season 7 | Episode 9
Market turbulence has arrived, and understanding the driving forces behind it is essential for making sound investment decisions. As the Trump administration rapidly implements new economic policies, markets are responding with heightened volatility, raising important questions about portfolio diversification and long-term strategy.
The administration's goals—bringing manufacturing jobs back to America, growing the US economy, maintaining tax cuts, and reducing international financial commitments—sound promising. However, markets are increasingly concerned about the lack of a clear, surgical implementation plan. Treasury Secretary Besant's comments about a potential "detox period" and President Trump's acknowledgment of a coming "transition period" have only intensified uncertainty, with JP Morgan economists now putting the chance of recession at 40%.
This uncertainty is triggering significant global economic realignments. Germany has announced major expansions in defense and infrastructure spending, abandoning its traditional fiscal conservatism. China is implementing stimulus measures to boost domestic consumption. These shifts are drawing capital away from US markets to international opportunities, with Chinese large-cap stocks up 29% since July.
For investors, this volatility requires careful consideration. The current week presents additional challenges as Daylight Savings Time disruption increases the risk of poor financial decisions—statistics show higher incidences of stroke, cardiac events, and financial mistakes during this period. If your portfolio feels uncomfortably positioned, now is the time to speak with your financial advisor about rebalancing.
Despite current turbulence, maintaining perspective is crucial. While US markets may be down year-to-date, the S&P 500 has nearly tripled over the past decade. History shows that maintaining diversified exposure to equities through broad-based funds has consistently rewarded patient investors who can weather short-term volatility.
What adjustments should you consider in your investment strategy as global economic power dynamics shift? The answer may lie in thoughtful diversification while maintaining the conviction to hold through market uncertainty.
** For informational and educational purposes only, not intended as investment advice. Views and opinions are subject to change without notice.
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And now introducing Mr Keith Lanton.
Keith Lanton:Good morning. Today is Monday, march 10th. I'm going to get started Eventful weekend. Lots of talk about lots of commentary coming out from the Trump administration over the weekend and some of that commentary is weighing on equity prices this morning. We'll start out just giving a snapshot. We can see how things are moving this morning the Dow futures are down about 1% 460 points, s&p futures down a little over 1% over 73 points and the NASDAQ down 306 points over 1.5%. On some of that talk over the weekend and we're going to address some of the policies that we're seeing being implemented by the Trump administration and try and decipher that so that we can all take in this information, think rationally and then apply the information that we receive in terms of what is best for our investment strategy, for our portfolios, how to talk to our financial advisors.
Keith Lanton:Many of us have gone through a period of mostly up markets pretty consistently, with a couple of years of dips since 2009. So many folks do not have the battle tested portfolio that they may think they had. They may think that they had a very aggressive mindset and may now be reassessing and thinking that perhaps, given their financial circumstances, their job, their age, that perhaps their portfolios are not as ideal as they thought just a few weeks ago. If that's the case, speak to your financial advisor. Ideal as they thought just a few weeks ago? If that's the case, speak to your financial advisor. There's still plenty of opportunity to course correct if you were not in sync with what you now realize is your investment or risk tolerance. It doesn't mean you need to make wholehearted changes. It means you may need to tweak. You just need to be able to have the fortitude to be confident in your portfolio so that you can be a successful investor. So you may have woken up this Monday morning a little bit more irritable than most Monday mornings. Perhaps that's because of the fact that the markets are exhibiting downward pressure and lots of folks are feeling the angst of the uncertainty and the concerns about their hard-earned dollars. Or perhaps the irritability this morning is the result of the fact that we had the clocks jump forward on Saturday or Sunday mornings at 2 am and therefore we experienced one less hour this weekend, and this may have thrown off our circadian rhythm and our sleep patterns. We may have wound up with an hour, or perhaps even more than an hour of less sleep than we were hoping to achieve. So that's an example of the fact that there is a real change when we do move these clocks and, in fact, statistics show that this week has a higher incidence of stroke, a higher incidence of cardiac events and a higher incidence of investors making poor financial decisions because they aren't thinking as clearly.
Keith Lanton:So, in the midst of all this turbulence, think about the fact that this is a week that is more challenging than others and try and be objective about your particular mindset. So, if you are feeling uncomfortable with your current portfolio, perhaps your portfolio got overweight in the max seven or just generally with tech stocks, or just overweight in equities in general and, as I mentioned, there's still an opportunity to rebound. There's still an opportunity to pivot. You may want to consider more fixed income in your portfolio, more bonds. You may want to think about more international stocks. You may want to think about commodities, and we will talk about international stocks because we're going to talk about the fact that markets are down and the reasons that they're down and what we should do about that. We're going to conclude with some talk about the US markets over the long, long term and how they've been tremendous performers and use that as a counterweight in terms of how you think about your investing.
Keith Lanton:So many individuals may have rebalanced over the last decade, but may not have rebalanced as much as they would have if markets weren't quite as stable, if the US hadn't performed quite as strongly as it has. So many people may have portfolios, despite the fact that they may have tweaked them that may not be completely looking like they would have looked in a period of more instability. So the fact that perhaps you haven't rebalanced the way you may have in different time periods doesn't mean that there is still not an opportunity. We're still looking at a Dow Jones industrial average that's over 42,000, a NASDAQ that's about 20,000. So don't feel like you've missed the boat, so to speak. There's still lots of opportunity to rebalance your portfolio. If you are feeling that discomfort, speak to your financial advisor and revisit your allocations.
Keith Lanton:Now let's address that uncertainty that we're seeing and look into what may be the causes of the recent market whirlwind. In order to do that, try and employ market expert. Long-term successful track record Ray Dalio. He wrote a book called the Principles. Track record Ray Dalio. He wrote a book called the Principles and in that book of the Principles, he outlined a way of thinking about addressing situations, and one of the things he said is you need to know before you get started is what is the goal?
Keith Lanton:And perhaps we as investors may want to think about all the turbulence that's taken place here in the US, the Trump administration rapidly changing their directives. One analyst this morning I remember which one I was reading said he feels like his head is on a swivel as the news comes in rapid fire to the left, right and in front and behind him. So what is the goal? Well, lots of folks may have different perspectives on what the goal is, but I'll try and lay out what I think a few of the goals are. One is to bring back manufacturing jobs to the United States for Americans, and I'm speaking strictly of economic goals. Two, the obvious goal is to grow the US economy for the long term. I think I've heard it at times, heard it in the State of the Union address A goal would be to improve our fiscal situation, perhaps lower the deficit.
Keith Lanton:Haven't heard it as much as some of the other goals, but certainly something that Wall Street has on its mind. Goal is to cut taxes here in the United States, and when we say cut taxes, one of the main things is to keep the current tax cuts that are in place for longer as a goal. This administration they've also mentioned other things like reducing taxes on Social Security, reducing taxes on tips, and then another goal that isn't necessarily an economic goal but certainly blends into the economic picture because it has to do with US spending is not to be the policeman of the Western world, to be more American-focused and not to be as much of an engaged financial partner in the rest of the world. This has to do with, of course, funding NATO, but also some of the aid programs that the US has funded over the years. We see a pullback in that and you could argue that some of these goals are contradictory, but nevertheless, I think that a lot of these goals are in alignment, and I think that this is what the administration is seeking to do, and we'll get more clarity and there may be other alignment, and I think that this is what the administration is seeking to do, and we'll get more clarity, and there may be other goals, and some of these goals may go on or off the table, but then we need to then take these as a starting point, and this is where I think that the markets are starting to struggle is what is the plan?
Keith Lanton:Jim Cramer on CNBC has talked frequently about this. He has said that he certainly hopes that there is a plan, and I would argue that if there is a plan, the markets never clearly got a clear picture of what that plan is. But when President Trump got elected, the markets certainly gave the Trump administration the benefit of the doubt that there was not only a plan but a good plan, and equity markets rose on expectations of this plan being implemented. Now, as time has gone on, the benefit of the doubt has shifted that perhaps there is not as clear of a plan as the markets thought, and now some are even suggesting perhaps there's maybe not even a plan out there that a lot of this is being done off the hip very quickly and this is bleeding into uncertainty in the financial markets and this is the uncertainty that we are seeing today. In fact, some of the commentary we're getting this morning and I think this is some of the catalyst for at least the downward momentum this morning.
Keith Lanton:Now, keep in mind, let's go back to that swivel Comments can come out during the day, they can shift things very quickly and this is the new paradigm of the market, and we experienced this somewhat with the first Trump administration. But comments that we did get in the last few days we got the Treasury Secretary, scott Besant, saying three days ago that there is no put on the financial markets, that this administration is not focused on Wall Street, it's focused on wall street, it's focused on main street. Then, uh, more recently, he said that the markets may go into what he called a detox period. That's uh something that's certainly uh gotten uh the market's attention and perhaps uh the, uh the the comments that the markets uh weighing most heavily was.
Keith Lanton:President Trump uh, when asked about whether or not the US would go into a recession in the next several months as a result of the policies, he declined to answer that question and emphasized that there was going to be a transition period, as he talked about at the State of the Union address. And markets are taking that, as perhaps things will get worse before they get better they get better. So, to address the plan or lack of plan, depending on your perspective markets are worried that if there is no plan, the tasks to achieve the goal have not been clearly delineated. So, to use the metaphor that President Trump himself used when talking about DOGE the Department of Government Efficiency and talking about a plan and whether or not there is a plan or isn't a plan, but when he was talking about the Department of Government Efficiency and talking about a plan and whether or not there is a plan or isn't a plan, but, when he was talking about the Department of Government Efficiency.
Keith Lanton:There was a clash that was being reported over the weekend between Elon Musk and Marco Rubio having to do with removing government jobs from Marco Rubio's group, and Marco Rubio obviously the Secretary of State and President Trump in that meeting, according to reports said that we need to use a scalpel and not a sledgehammer in order to effectuate these changes within these large organizations. And the use of the scalpel is a good metaphor for perhaps what the Trump administration is seeking to do, because what they are seeking to do is to change a lot of the world order that got established in the post-World War II period. And if any of you have ever worked on something that's been put together over 80 years and is considered pretty solid and pretty strong and has been a bedrock on which a lot has been built upon, and you're looking to fix it and repair it, as the Trump administration is seeking to do well, when you're looking to repair that item and it's a big, solid item that's got all sorts of grease and cement that's been holding it together well, taking it apart has got to be done pretty carefully, pretty gently and pretty exact and specifically, and you need that surgical precision, and I think that's what the markets are looking for. So I think the markets are looking for indications that there is that surgical precision, that there is a plan and that there are tasks that are laid out to get to that plan. I think the markets are willing to give the Trump administration and President Trump the benefit of the doubt that he can steer a new course. But what the markets are now asking is what is that plan? Show us what the tasks are in order to get that done. I think if you don't do that, then well, you may not only just lose the financial markets, but you might, in fact, start to lose the American people. And that's the crossroads that we're at today. And that's why perhaps we're seeing a little bit more downward pressure, because we're getting this narrative this morning from President Trump and his administration that things may get worse before they get better. We haven't heard that before from this administration. That's not certainly the campaign that they ran upon, and these are the reasons that we're seeing this angst this morning. In fact, barron's over the weekend ran a column entitled Investors in a Bad Mood. This time they may be right. Barron's went on to say a Friday rally can't hide the fact that the stock market is stuck in an ominous pattern and it's not clear what will shake it out. And this is not their worst weekly performance in months, as markets will whipsaw it.
Keith Lanton:On tariff news, s&p last Friday was up six-tenths of a percent but was still down 3.1% on the week Worst week since September. S&p is now down before today 1.9% for the year worst week since September. S&p is now down before today 1.9% for the year, going to open down about 3.5% for the year. The Dow fell 2.5% last week, nasdaq down 3.5% last week. And the problem which we just talked about is uncertain federal policy which is causing businesses to hold off on making investment decisions.
Keith Lanton:President Trump imposed tariffs on Canada, mexico and China before backtracking on some of the penalties and then promising more to come. Now the word uncertainty came up 47 times in the latest Federal Reserve's page book. That was three times more than was mentioned that word was mentioned in January. Good news is that the economy, at least at the moment, is holding up relatively well. On Friday, labor Department said 151,000 jobs were added. That was slightly below forecast, but not much. Federal Reserve Chair Jerome Powell reassured investors, saying the economy is in a good place, but investors are starting to behave that things may get worse, us Treasury yields coming down, caused by worries about signs of slowing US growth Yield on the 10-year Treasury this morning down to a 424 from 431 on Friday.
Keith Lanton:So we're seeing yields dropping on the 10-year Treasury and these yields have dropped from January's level of $4.80. So Treasury market $4.80, this morning $4.24, and this is largely on concerns that the economy here is getting weaker and there are areas of concerns in the jobs report, including a jump in the number of people working part-time for economic reasons. So what are we seeing? Some investors do? Well, they are rotating into companies that do better when times are tough. Market winners last week were flight-to-safety stocks like discount chain Dollar General, colgate-palmolive and some of the pharmaceutical stocks also seeing gains.
Keith Lanton:Last week, another column in Barron's Trump is engineering a global paradigm shift that doesn't favor US stocks. In a matter of a few weeks, president Trump has begun to fashion a new world order. So far, the main effect has been a $3 trillion reduction in the value of US stocks since January 20th inauguration. So what are investors to do? They say stay liquid, stay agile, as the news will be coming fast and furious, which we have seen. We've gotten a blizzard of announcements on tariffs, terminations of federal employees. We've also gotten reversals on tariffs and we've seen significant changes in US policies abroad. Germany, on the flip side, has reacted to the policies of the US changing its attitude towards Europe and NATO, and Germany last week announced a major expansion of defense and infrastructure products. They, in the process, threw up its previous restraints on borrowing and military spending. That is a huge paradigm shift. When you see the Germans, who have always been so fearful about inflation, so cautious, so careful, and saying that they are going all in on things like improving their economy and military spending and going it alone, these are things to be mindful of when thinking about shifts in your portfolio, when you see these big shifts and big transitions.
Keith Lanton:We had Treasury Secretary Besant. I said some of his quotes earlier when he was talking about the rearrangement of the global world order. He was referring to an unconstrained, what he called trade misalignment. What that means is that the US is running budget deficits versus the rest of the world, and what we are starting to see is the US seeking a more balanced budget deficit with the rest of the world, and what that means is that these domestic economies that are relying on exports well, they need to prime their economy for domestic consumption.
Keith Lanton:We're starting to see that in Germany and we may start to see that in China as well. In China, we see that they have passed some big fiscal spending measures in a bid to spur domestic spending and to wave off the deflation that's been the result of real estate's decline. President Xi says he wants growth, and this recent commentary has led to a strong rally in Chinese equities. The ETF FXI, which is a large-cap Chinese ETF, is up 29% since July. We've also seen a great deal of strength in the German stock market and a great deal of weakness as folks reassess their perceptions about Germany's growth in inflation, and a great deal of weakness in the German bond market, and what this also may be leading to is capital that was invested here in the United States, where our markets were perceived as the markets that were going to continue to go up for the near term, as well as the fact that the dollar was strong. This is something that benefits international investors in two ways. One, their currency goes up. Two, their investments go up. That leads to more flows into the US and into our markets. Perhaps we're seeing a reversal of that trend. As foreign markets go up, foreign currencies go up. So one of the reasons we may be seeing weakness here in the United States is not just because of events taking place here in the US, but events taking place overseas, albeit perhaps as a result of some US policies, but nevertheless these could be true shifts that will take place over the next several quarters as some of the world realigns itself here with the changing policies in the United States. And this has happened before, although perhaps arguably, since World War II, not to this extent, and we will talk about how the US has performed over long periods of time and be able to not forget that fact when we do talk about how to align our portfolios.
Keith Lanton:Moving on this morning, let's just get a snapshot of where we are right now. We have Dow futures down 476,. Nasdaq futures down 337, s&p futures down 80. I mentioned the 10-year Treasury is at a 424. That is down about 7 to 8 basis points from where it closed on Friday, which means that we were at about a 432. On Friday, which means that we were at about a 4.32. Now we're at about a 4.24. That's the eight basis points difference in the yield from 4.32 to 4.24. Interestingly, we are seeing oil and natural gas move up this morning. Oil is up about 50 cents a barrel to about 67.50. But natural gas leading the charge up 18 cents to 4.58. Gold this morning is down about $10 an ounce to $29.03.
Keith Lanton:Other fact new companies, other events in the news this morning, politico reporting that the House GOP introduced a plan over the weekend for a continuing resolution that would prevent the March 14th government shutdown. It looks like that the House, in order to avoid a government shutdown, is going to need to keep all Republicans voting for keeping the government moving, something that Speaker Johnson's had a challenge with in the past. He's needed Democratic votes in order to get that done. Democrats say no votes will be forthcoming, so this time around he's going to need that support. President Trump by many reports, has been influencing some of the members that in the past had not voted for these continuing resolutions to have a different perspective this time, in a Fox News interview over the weekend, mentioned President Trump not declining to rule out a recession, also saying the US economy faces a period of transition. New York Times is reporting that US producers of metals like steel say they are in support of tariffs and this morning China did announce another round of retaliation against the tariffs that the US imposed at the beginning of last week.
Keith Lanton:Imposing tariffs on US agricultural products, seeking to has a history on the banking side. He was the leader of the Bank of England and the Bank of Canada, so a financial expert, so to speak, now becoming the next Canadian prime minister. Now he may be prime minister for a little time or a long time, because there will be elections in Canada no later than October 31st. At the moment, the Labour Party, of which Mr Carney is a member of, seems to have the wind at its back, as there's been a lot of rallying around the Liberal Party in reaction to the actions here in the United States and sort of rallying around the flag. So Mark Carney out with some strong words about tariffs and their reaction of Canadians to the US. So we'll see how his election perhaps influences the dynamic taking place between these two friends.
Keith Lanton:Taiwan Semiconductor came out with earnings stocks down slightly this morning. Revenue did climb 39% in the first two months of this year, showing resilient demand for chips, in particular NVIDIA chips. The volatility index, the VIX, this morning is up to over 26. This is the last time that this index has been this high. The volatility index was back in the sell-off and taking place in 2022. So we are seeing, and anyone who's been watching can feel the volatility, and the numbers confirm it. To recap a couple of statistics here S&P 500 has wiped out all of its gains since President Trump was elected in November.
Keith Lanton:The technology-heavy NASDAQ 100 index briefly slumped into a correction Friday after it plunged more than 10% in 17 days. If the market were to close where it is now, we'd certainly be in correction territory. With the downward open on the markets today, we'll see how we close. Nvidia has erased almost $1 trillion in market value in two months. Two-year Treasury yields have fallen on bets that the Federal Reserve will resume interest rate cuts. The dollar is now around 4% below the post-election peak it reached in January and it fell last week to its lowest level since November. Jp Morgan economists are saying that they now see a 40% chance of recession this year. Policies and the other knock-on effect of this we talked about this the US's America First vibe is leading to turbocharged spending in Germany. We also saw the emergence of a startup deep-seek in China, and these factors are drawing capital to places outside of the United States, and perhaps that's another reason for what we are seeing in terms of volatility.
Keith Lanton:All right, going to move on to Barron's. Going to talk about a stock first and then talk about the long-term trends in the US stock market, but going to mention a stock in a sector that certainly is not feeling any love, and that is a solar stock. The Trump administration certainly embracing fossil fuels and reversing course on some of the Biden administration's green policies, but Barron's out saying that this presents an opportunity for some of the solar stocks. And, if you think logically and think common sense-wise, solar companies that haven't taken on too much debt, that can survive this period of turbulence, may be in a very good position going forward. Because, again, fossil fuels certainly is the commodities that have fueled the energy needs of America and the world for the past roughly 100 years. But if 100 years ago, I would argue that if solar energy was as good and efficient as it is today and will probably continue to get better, if you think logically, if you were going to create energy, would you like to create energy from something that can absorb energy from this huge ball of gas that's glowing in the sky every day energy from this huge ball of gas that's glowing in the sky every day or would you rather use energy and get energy from drilling into the ground and having to transport whatever it is that you suck out of the ground to another location and then burn that fuel and transport it over transmission lines. It seems fairly logical that if solar energy becomes better and better, that over time market forces will see to it that solar energy certainly has a participation and a meaningful participation in the future of US and international energy consumption.
Keith Lanton:The risk is that if you are leveraged in the solar space, you've taken on a lot of debt. You may not be able to survive in this turbulent time. Or perhaps you built an economic model that was based on subsidies and government handouts. Well, those are no longer coming like they were before, and that model is not working either. So SunPower, which was a solar stalwart for nearly 40 years, filed for bankruptcy in August. Synova Energy, another leading rooftop solar developer, recently said it wasn't sure how long it could stay in business, given its deterioration in its cash position. But that doesn't mean, as I was just saying, that all other kinds of solar companies are doomed. While the entire industry is impacted by potential changes under Trump's guidance, large-scale solar installations may still be very good economic bets.
Keith Lanton:The US is entering a period of high electricity demand. Thanks to new data centers and factories, utilities have been turning to natural gas to fuel some of that generation, but new gas turbines take years to install. Renewables like solar can be available much sooner. Solar was the largest source of new utility scale energy generation last year and is expected to account for 52 percent of electricity additions in 2025. Barron's in this article speaks about one company called Clearway Energy. The symbol is C-W-E-N. Charlie Whiskey, eddy November. This is a Princeton, new Jersey-based company that owns nine gigawatts of solar, wind and battery installations around the country enough to power several million homes. They also have more than two gigawatts worth of natural gas plants. They are considered what's called a yield co, which is a corporation that owns assets like renewable plants that generates cash over periods that span decades. It is controlled by a sponsor company co-owned by Total Energies and BlackRock that develop renewable projects and sometimes sell those projects to Clearway, though Clearway makes independent decisions over whether to buy them and at what price. Clearway also buys projects from other developers. Now, yieldcos tend to pay big dividends and Clearway, which trades around 27, is no exception. The stock's dividend yield is 6.3%, and that dividend payout has been increasing.
Keith Lanton:Now we were talking a lot about competition for US equities, particularly between international stocks, bonds, commodities like we were just talking about some of the commodities and speaking about commodities this morning in the risk off atmosphere, we are also seeing a significant pullback in Bitcoin this morning as well. So, just speaking about that, bitcoin is down about $7,000 from its close over the weekend. This morning Bitcoin's up $600, but Bitcoin sold off over the weekend from like $90,000 to $82,500. And now it's about $83,200 this morning. But let's talk about the US markets over long periods of time and it could be argued that the latest hiccup that we're experiencing here is a brief hiccup in what's been a long crescendo in the US of hallelujahs. The index was and is down slightly year to date, and this morning it's on its way to being down a little bit more.
Keith Lanton:But if you look out over the past decade, the S&P 500 has just about tripled over the past decade. So again got to keep things in perspective. And recently three UK professors released a report. Uk professors released a report and this report should give investors some ammunition over how to think about returns over long periods of time. And the US, they argue, has gone from exceptional to what they call exceptional-er. So in 2000, the US had been the best-performing stock market of the prior century, swelling from 14% of the world market to 49% of the world market. Previously the UK, going into the 20th century, had been the world's largest market. They had been about 24% of the world's capitalization in 1900. They're now about 3% of the world stock market. So US, now up to about 60% of the world's capitalization, has continued to perform, even as many have suggested that it had peaked and faded away. Now there have been periods since 1900 when the US has been challenged. Japan became 40% of the world's market in 1989. At that time the US has been challenged. Japan became 40% of the world's market in 1989. At that time the US was 29% of the world's market. Japan today is about 6% of the world's markets.
Keith Lanton:And we were just talking about international diversification and one of the reasons that Americans haven't diversified is because we talked about it. Well, it hasn't been a successful strategy. International markets have not performed. We see that going into the beginning of 2025, they're off to a strong start, but over long periods of time, whether it was 1970s, 1980s, 1990s or 2000,. So basically, over the last 50 years, if you had gone outside the United States with a portion of your portfolio, you've underperformed. Now the argument could be made. Well, that trend may reverse. We were talking about considering some international diversification, but over long periods of time, in the most recent 50 years, that has not worked. We also talked about diversifying into bonds. That has not worked. We also talked about diversifying into bonds, but since 1900, bonds have returned about 1% over inflation compared to stocks, which have done significantly better. So, keeping in mind again, over long periods of time, owning stocks versus bonds has been a much more successful strategy.
Keith Lanton:But one of the main reasons to own bonds, to own international stocks, to own commodities, is in order to give yourself the comfort that when stocks are zigging, perhaps something else is zagging, and that might be international stocks, that might be commodities, that might be bonds. So the reason perhaps to own those assets even if you love US stocks if you're personally is so that you have the ability and the conviction to hold on when things get really hairy and scary, like they did in 2008 and 2009. And like they will again, whether it's now or later, things will get scary again. Other assets will perform better in bonds and if you do not have the ballast in your portfolio and the ballast in your stomach to be able to survive those swings, well, perhaps you need some of this diversification in your portfolio. Also keep in mind this is something we've talked about in the past many times US stocks have returned about 9.7% over the past century, almost 7% after inflation.
Keith Lanton:But we've talked about the fact that it's not because every single stock is great. It's because of the fact that there's been a handful of stocks that have been great. But the problem is is that identifying those handful of stocks is close to maybe not maybe not for someone like Warren Buffett, but close to impossible. So, as we've talked about before, 57% of US stocks have had lifetime returns worse than treasury bills. Yet we've seen that overall returns and equities have been 9.7%, and that's one of the reasons to hold a big basket of stocks. How you accomplish that, whether it's through an index fund or through a more active fund. Just choose wisely. You need that big basket of stocks and the reason you own that big basket of stocks is not to dilute the damage from your losers, but it's because most of them will be losers. But you need to have that big basket because you need to cast that wide net, because you need to snag the winners. Nvidia has been a tremendous winner since 2001. And I don't care how good you are, very few folks have owned NVIDIA unless you've owned it through a basket of stocks in a fund or through a portfolio. Very few folks have owned NVIDIA unless you've owned it through a basket of stocks in a fund or through a portfolio. Very few folks woke up in 2001 and said you know what? I think NVIDIA is going to be the greatest stock for the next 23 years. Unlikely that that happened. But if you have that broad basket, well, that was in that broad basket in all likelihood, all likelihood.
Keith Lanton:Others are pointing out the fact that, well, here in the US, I'm really concerned because the market is really concentrated in just a handful of companies. Three stocks make up 19% of the market that's the highest in 92 years. Does something have to give? Maybe that's a sign. If you look back to 1900, the market was 63% made up of railroads, but somehow stocks have done well since then, even though railroads now make up less than 1% of US equity market capitalization. And if you look overseas and you look at the top three holdings, you'll see that in France it's 23% of the market. Germany, the top three holdings are 36%. Korea 40%. Taiwan 59%. A 36% Korea 40% Taiwan 59%, the authors of the study say. In fact, among the world's dozen largest markets, the US is the third least concentrated, behind Japan and India.
Keith Lanton:That's everything I've got.
Alan Eppers:Thank you for listening to Mr Keith Lanton. This podcast is available on most platforms, including Apple Podcasts, Spotify and Pandora. For more information, please visit our website at www. heraldlantern. com.
Sophie Cohen:Opinions expressed herein are subject to change and not necessarily the opinion of the firm. Past performance is no guarantee of future results. The information presented herein is for informational purposes only and is not intended to provide personal investment advice. It is important that you consider your tolerance for risk and investment goals when making investment decisions. Investing in securities does involve risk and the potential of losing money. The material does not constitute research, investment advice or trade recommendations.