Our CIO’s Take: What Evolving Policies Mean for Investors

Our CIO was recently interviewed on a host of topics in a rapid format Q&A … read what he had to say.

Reacting to headlines has never been a sound investment strategy — and under the Trump administration, it has arguably been an even worse one. The President’s approach to negotiations follows a recognizable pattern: he starts with extreme positions to offer concessions later, aims for unpredictability to keep stakeholders guessing, and actively uses social media to shape public perception and gauge real-time feedback on policy ideas. 

A prime example occurred when Trump announced his intent to impose tariffs via social media, triggering an approximate 3% drop in equity futures. However, markets quickly rebounded after Mexico and Canada struck deals to enhance border security, leading the administration to shelve the tariff threat within 24 hours. This was a classic Trump playbook strategy, and the S&P 500 Index remains within 1% of its high-water mark. 

Will U.S. tariff policy drive market volatility?

A recent JP Morgan survey suggests traders anticipate that changes in U.S. tariff policy will significantly increase market turbulence. But is that the case? 

Investors should always assume markets will be volatile and plan accordingly. Every year presents a new “fill-in-the-blank” threat that is said to increase turbulence. While uncertainty remains, we have no strong reason to believe that the market will be more or less volatile than its historical norm.  

How should investors approach the “Mag Seven” in light of DeepSeek?

The “Mag Seven” are great companies and have also been great investments to hold to date. Still, history shows that even industry leaders can fail, while long shots can sometimes prevail. Trees don’t grow to the sky, and as these companies scale, their ability to double in size becomes increasingly tricky. 

The revelations about DeepSeek have not fundamentally altered our outlook on the “Mag Seven” or the broader tech sector. Our approach has never been to extrapolate past performance indefinitely. Instead, we prefer a diversified strategy that captures macroeconomic, market, and social trends —including innovation — rather than betting on individual winners. Artificial intelligence will likely impact nearly every industry, not just technology firms or AI-focused funds.  

What are the best investment opportunities for owners of significant private capital?

In private markets, we prioritize resiliency — investments that can withstand and thrive in a rising interest rate environment or a potential economic downturn. 

• Private Credit: We favor a senior secured, first-lien position while avoiding pay-in-kind and covenant-light debt. 

• Private Equity: We seek managers with a hands-on approach to value creation rather than those who relied on cheap leverage in the past. 

• Real Estate: We target sectors with cycle-resilient demand driven by demographic trends, emphasizing short-term leases that allow for frequent repricing and better inflation hedging. 

How does government restructuring affect the market outlook?

The Trump administration’s restructuring efforts introduce uncertainty but have not influenced our expectations for asset class returns. When forming an economic or market outlook, it is crucial to consider all factors in aggregate — tax policy, trade policy, government spending, immigration, deregulation, and monetary policy. Each of these elements presents headwinds or tailwinds, and their net impact is what truly matters. 

Final thoughts

Market volatility, policy shifts, and economic disruptions are constants, not anomalies. Our strategy remains focused on long-term fundamentals rather than short-term political noise. While the new administration may introduce new uncertainties, sound investment principles remain unchanged: diversification, discipline, and a focus on value creation will always be the cornerstones of successful investing. 

The information contained in this document is provided for informational purposes only and should not be construed as individualized advice. For individualized advice, please consult with your adviser.