To Inform:

Earlier this week, TJG Chief Investment Officer Alex Durbin, Summer Intern Avery Rice, and I (Travis) attended the Ohio RIA Summit in Downtown Columbus. It was a gathering of investment managers and financial advisors across Ohio and an opportunity to share ideas and best practices.

I had the good fortune to serve as one of the speakers on the opening panel of the conference, a session titled Navigating Evolving Global Markets: Insights and Opportunities. Below are key quotes and my commentary on those quotes from the day.

“Markets tend to respond more to Better/Worse than Good/Bad.”

Frequent readers of Wealthnotes may recognize this quote as a TJG favorite and it was something I said during the opening session. A question was asked regarding how we make sense of stocks recovering following the delay in implementing tariffs, and more recently, how markets defied conventional logic with stocks going up and oil prices going down after the United States bombed Iran’s nuclear facilities.

My answer was that even though these items (tariffs, war) may be considered “bad” by most investors, the outcomes were better than what the market expected. Markets tend to move more based on whether the outcome of an event is “better or worse” than the market expected, and not the explicit judgement of whether the event is “good or bad.”  In our opinion, knowing this adage is helpful to understanding the market’s recent behavior.

“We want portfolios to be anti-fragile, and, in this environment, we believe that means having a global perspective.”

The opening panel had a lively discussion about whether U.S. exceptionalism, which has dominated markets the last few years, may continue. A point was made that without one or two key U.S.-domiciled technology stocks, returns for the S&P 500 would not be that different from the returns of foreign markets. A second point was made that we are seeing more “de-globalization,” characterized by diminished trade integration and more local supply chains.

In this environment, there are simply more questions than answers. Trends which have started in 2025, such as a weaker U.S. dollar (which has led to foreign stock performance leadership) may continue. We believe success for objective-based portfolios means having something which may work regardless of which trends prevail. In other words, seek to make portfolios “anti-fragile” through global diversification.

“Valuation is important over the long run, but it is a poor market timing tool.”

A member of the audience asked, “should investors let their winners run, or sell what has gone up and move into what is cheap?” The question sparked a lively discussion. The conclusion – valuation definitely matters over the long term. BUT, a stock or asset class which is expensive can get more expensive, and a stock or asset class which is cheap can remain cheap for a long time. It’s easier said than done, but investors should seek to identify a catalyst which may change valuations before making a major allocation shift based on valuations alone.

“Compounded returns are more important than average returns.”

I especially enjoyed having the opportunity to discuss basic investment concepts with our Summer Intern, Avery, after a presentation which focused on an investment strategy which focused on minimizing downside risk. The presenter showed an example which looked at a series of stock market returns, and then a portfolio which simply earned half the upside or downside return each year. The conclusion, based on the presenter’s example, was the less volatile (half the ups, half the downs) generated the higher level of ending wealth. Why? When it comes to investment math, it takes a bigger percentage gain to make up for a given loss.

Ok Travis, what are you talking about here?  Here is my simple example. Which of the following portfolios would you rather own?

• Portfolio A:  Up 60% in Year 1, Down 40% in Year 2
• Portfolio B:  Up 30% in Year 1, Down 20% in Year 2

Hmmm, someone doing some quick math with averages may say the average return for Portfolio A is ((60-40)/2) = 10% while the average for Portfolio B is ((30-20)/2) = 5%. But picking Portfolio A would be a losing choice. Putting $100 in Portfolio A would grow to $160 in Year 1, but after losing 40% in Year 2, it would have a final value of $96. Putting $100 in Portfolio B would grow to $130 in Year 1, but after losing 20% in Year 2, it would have a final value of $104. When you look at compounded returns, (which is what ultimately matters for wealth creation) Portfolio B is the better choice.

Why does this happen? When it comes to investment math around losses, percentages are not linear. It takes an 11% gain to back to even after a 10% loss, a 33% gain to get back to even after a 25% loss, and a 100% gain to back to even after a 50% loss. The math supports the conclusion that investors don’t always need the most upside, if they avoid some downside, to meet their long-term return objectives.

The Ohio RIA Summit was a successful conference, and I loved Intern Avery’s perspective: “I enjoyed meeting people who come from different financial backgrounds, but all have the same passion, which is to serve clients best.” 

Serving clients best is what it is all about.

Written by Travis Upton, Partner & CEO