Monthly Outlook: September 2025
Labor Day weekend is the unofficial end of summer. Most kids hate it, most parents love it, and on Wall Street they say that the grownups come back to work (probably from the Hamptons and Aspen) and get serious. With eight months of 2025 already behind us, nearly every market remains uptrending and portfolios have sizeable gains. We’re still “all in” for growth, with little cash buffer. But we remain vigilant for any changes that would shift investors from fear of missing out (FOMO) to fear of losing out (FOLO?). Given the state of the world, such a change could happen quickly.
So, let’s use this calm period to get serious about wealth management. Our professional goal is to help our clients live their best lives by making their wealth work for them in the most risk-managed, tax-favorable way. Along the journey, we encourage them to invest in their health, relationships, and aspirations. Carpe diem, after all. But mostly our “lane” is to manage their financial wealth. But the theme of this month’s Outlook, is wealth – compared to what? How does one know if they’re growing their real wealth, keeping up, or falling back?
Thinking Beyond $US Dollars
It seems like nearly everyone is hyper-focused on “travel.” Based on social media, it looks like everyone just got back from a fabulous trip or is embarking on one soon. No judgement, I’m traveling soon, too. The point is that we live globally, traveling and spending in various currencies. Even when we’re not traveling abroad, we’re buying things and services that were produced outside the U.S. Why then, do we price everything in $US Dollars and keep track of financial wealth in $US Dollars. True wealth is global, and we should think about wealth as “stored future spending – on global goods and services.” If we accept that as true, then we should measure wealth against other “denominators”, not just $US Dollars.
Let’s look at some examples of YTD returns of the major asset classes, priced in $US Dollars (like you’re used to), but also priced in €Euros, and priced in Gold. In $US Dollars, 2025 feels pretty good to most Americans so far, with US stocks up 10.7%, INTL stocks up 23.1%, and Bonds gaining 4.9%. But what happens if you price these same markets in Euros, like you naturally would if you lived in Europe? Well, to our European friends, US stocks are actually down 2.7%, INTL stocks are up 8.2%, and Bonds are down 7.7%! Same markets, but totally different view. Is the American wealthier and the European less wealthy? No. Now, let’s consider a third investor, one that prices everything in gold. For them, US stocks are down 15.8% YTD, INTL stocks are down 6.4%, and Bonds are down 20.1%. This investor is having a terrible year, right? Yet all three investors are looking at the exact same markets.
Looking at markets in this way is like moving from playing checkers to 3D-chess. But this is really a better way to approach wealth management. It’s not enough to just accumulate more $US Dollars, you want to accumulate real wealth – across all denominators.
Using Tilts in Portfolios – Beyond Up or Down
The typical portfolio manager starts with making an asset allocation decision about how much they want to allocate to each chosen market. The first step is to invest in those markets, and in those percentage allocations. Many stop right there, buy and hold, and manage their hopes and fears. That’s checkers. The next level is to try and buy more of the markets that are moving up and sell a little of the markets that are moving down. That’s 2-D chess. It can help to beat benchmarks, especially during drawdowns.
To manage global wealth, one should go further than up or downtrends, and compare “this to that” – one market relative to another AND whether it’s going up or down. That’s 3-D chess! Today, US Growth > US Value, INTL Value > INTL Growth, and both US and INTL stocks are > Bonds. Nearly all markets are uptrending, so you should remain invested in any case. This is how we see our job of wealth management and the best way to grow and protect sustainable, real wealth. We can talk health and travel, too.