by Tom Bradley

Before I address the current market turmoil, let me correct something I said in a recent post. I misspoke when I said, “The range of possible market outcomes [right now] is wide, making it a poor time to hang your hat on a few focused bets (including going all cash).” I was making the argument that it’s a good time for your investment portfolio to be diversified.

Yes, it has been a good time to be diversified, but it’s always a good time, and we should always be prepared for any and all possible outcomes in the short term. When markets are calm and the news is benign, investors (and professionals) are often guilty of recalibrating and narrowing the range of what can happen, but they shouldn’t. Nor should they exaggerate possible outcomes in difficult and confusing times like we have now.

It’s useful to review what it means to be diversified.

• You have exposure to a broad array of asset types, industries, economies, and currencies, all of which take turns contributing to returns. 
• You’ll participate in every bull and bear market, but not to the full extent. 
• You won’t love everything in your portfolio. Invariably, there will be holdings that haven’t contributed for a long time or have even been detracting from returns. 
• You’ll always recover after a big decline. Not everything will bounce back, but when you’re properly diversified, you’re assured of reaching new highs. It’s just a matter of when. 
• There will always be someone in your social circle who is on top of the latest trend and doing better than you, but it will be a different person every time. 
• Contributions, withdrawals, fund switches and rebalancing will all be done in the context of a framework. No emotionally charged, mind-bending decisions, or need to make what I’ve dubbed ‘the hardest decision in investing’ – getting back into the market after getting out. 
• And importantly, you’ll sleep better at night.

As you’ll see in the fund commentaries, our adjustments to the current situation were mostly done through the asset mix of the Founders Fund. The tariff news out of the White House was so unpredictable and ever-changing that it was difficult to justify making significant shifts in strategy in the underlying bond and equity funds.

In response to above-average valuations, rampant speculation and tariff uncertainty, we took advantage of strong markets and dialed down the equity content in Founders. With the proceeds, we increased the bond weighting (income; insurance in periods of economic weakness) and maintained a healthy cash position (income; liquidity to pursue opportunities).

Our funds are feeling the tariff downdraft, but not as much as the headlines and indexes would suggest. And importantly, they’re now in position to take advantage of price weakness and growing bearish sentiment.

In other news, you saw our announcement last month that we’re joining Purpose Unlimited. I’m excited about this partnership and the numerous benefits it will bring to our clients. If you have any questions about the deal, your portfolio, or the current market environment, please reach out to one of our Investor Specialists at 1-888-888-3147.

I encourage you to read the rest of our Q1 Report, where we provide more details on our specific strategies and what we've been doing in each of our funds.