Weekly Client Letter

Nvidia has had such a dominant impact on the S&P 500 that if you removed it from the index, U.S. markets would be underperforming their European counterparts since the 2022 bottom. This single stock has driven much of the index’s recent gains, but disruptions like the developments in AI with DeepSeek have now sent Nvidia […]

As President Trump takes office, he is greeted with unusually high stock prices, a situation that can make the financial markets more sensitive to changes in policy. This unique challenge means that decisions made during his presidency could impact the market more significantly than usual. No administration has dealt with higher valuations when taking office.

Historically, stocks and bonds have had a negative correlation, allowing bonds to act as a stabilizer during stock market downturns. Recently, however, this relationship has turned positive, meaning the traditional diversification approach may no longer offer the same protection. Similar to 2022, when stocks and bonds move in tandem, both assets can decline simultaneously, leaving

The NASDAQ Composite Index’s history shows how devastating market downturns can be. After the crash in the early 2000s, it took 15 long years for the index to recover its losses-a stark reminder of how fragile gains can be. With the NASDAQ surging recently, it’s critical to recognize that what rises quickly can fall just

As we close out 2024 and step into 2025, many investors are asking what kind of year lies ahead. With the S&P 500 delivering over 20% returns for the second consecutive year, history suggests caution may be prudent. Past instances of back-to-back 20%+ years have often been followed by sharp drawdowns, averaging over 20%, as

Wall Street “experts” predict the market’s direction every year – and for the last five years in a row, they’ve been wrong. The chart makes it clear: the only consistent thing about these predictions is how inaccurate they are. Even with endless data and resources, forecasting the market’s future remains unreliable. That’s why at Redwood,

The dramatic surge in the money supply (M1) since 2020 – rising fivefold and peaking in 2022 – has left a lasting impact. M1 represents the most liquid forms of money: cash, checking deposits, and similar funds readily available for spending. Nearly 80% of all dollars in circulation were created in the last five years,

Investor optimism is showing up in big ways: U.S. exchange-traded funds (ETFs) have already taken in over $1 trillion this year, breaking 2021’s record with two weeks left to go. November was especially striking, with daily inflows averaging $7.3 billion, fueled by expectations that the incoming Trump administration’s tax policies could boost growth. Equity ETFs

The growing gap between government spending and tax revenue has created a significant challenge for debt markets. Persistent deficits require increased borrowing, adding to the national debt and driving a flood of new Treasury issuance. This influx of supply pushes yields higher, eroding the value of existing bonds and increasing the cost of debt. The

U.S. stocks have reached a 75-year high compared to global markets, reflecting remarkable growth and the resilience of U.S. companies. However, history reminds us that markets are unpredictable, and no trend lasts forever. Diversifying across regions and sectors helps protect your portfolio from sudden shifts and ensures balanced growth over time. We remain vigilant in