Author: Travis

Like most families with school-aged kids, the school year keeps us busy—not just during the week, but on evenings and weekends, too. And as the school year goes along, the intensity ramps up. Beyond the usual sports and activities, we’re suddenly juggling end-of-year programs, parties, and ceremonies. I joke that we don’t so much glide into summer as crash-land into it—by the time summer rolls around, we need the break.

This year felt familiar in that whirlwind kind of way, with one major difference: our daughter graduated from high school. We knew the day would come, but that didn’t make it any less emotional. High school and college graduations stir up a beautiful mix of feelings. We look back on all the memories we’ve made, and at the same time, we’re filled with excitement (and maybe a few nerves) about what’s next—especially when our kids are heading off to study something they’re passionate about.

Big transitions are exciting, nerve-racking, fulfilling, even scary. Whether it’s graduation, starting a new job, getting married, having children, retiring, or even saying goodbye to a loved one—these seasons of change are deeply impactful.

One aspect of transitions that often stirs anxiety is the financial side. Moving from high school to college, college to career, career to family life, or family life to retirement—each stage brings new financial responsibilities. That’s why planning is key. It’s not just about having savings and investments in place—it’s about making sure those investments are balanced and aligned with your goals.

To help with that, we’re rolling out a new software program this summer. It’ll let you track your investments in real time, but more importantly, it’ll help you map out your goals—whether you’re just starting out or planning your legacy. Our hope is that this tool will ease the stress of life’s transitions and free you up to focus on what really matters: making the most of the big and little moments you have with the people you love.

~Travis Raish, CFA

Have you ever been under a power line or stopped at a traffic light, only to have the sound on your radio cut out, overwhelmed by static? Sometimes it’s so bad you can barely hear the program you were enjoying. Maybe you turn up the volume, straining to catch the voice behind the noise. But often, even that’s not enough to allow us to hear the person clearly. The stock market can feel the same way—important signals are often drowned out by the constant buzz of news and speculation.

The stock market is an incredible tool. It allows us to invest in great businesses and adjust our portfolios with ease. But this convenience comes with a challenge: it’s almost too easy to react impulsively, especially when the noise of the marketplace—media headlines, social media chatter, and economic fears—distracts us from what truly matters. This noise can lead investors to make the wrong decisions at the worst possible times.

Over my 30+ years in this industry, I’ve seen it all: the dot-com bubble, 9/11, the credit crisis, COVID, and countless other crises, both real and exaggerated. Time and again, I’ve witnessed how things often turn out better than expected. Even when the outlook seems bleak, markets recover, mistakes are corrected, and great businesses continue to thrive.

Take the credit crisis, for example. It was a near-collapse of the financial system, causing markets to lose significant value in just 18 months. Yet, barely two years later, we were back on track and shortly thereafter, the market had fully recovered. This resilience is a testament to the strength of well-managed companies that adapt, innovate, and grow—even in the face of adversity.

As investors, it’s crucial to tune out the noise and focus on the fundamentals. We don’t own the stock market; we own businesses—businesses that have weathered far worse and emerged stronger. By staying disciplined and avoiding emotional reactions, we can trust in the long-term success of these companies and the value they create for their customers and shareholders.

~ Travis Raish, CFA

As the new year begins, many of us aim to adopt healthier diets and habits. Similarly, it’s crucial to pay attention to our finances and investments at the start of the year.

Our investment decisions are guided by our research and the evaluations we make about the companies we own, their expected growth, profitability and financial stability. Some industries focus on short-term outlooks, while others take a longer view. Each company’s growth path is unique, and understanding this is key to making informed investment choices.

The new year also brings the challenge of preparing for Tax Day. The upcoming tax season and the new administration’s policies will be significant. Tax cuts from the Trump administration are set to expire at the end of 2025. While corporate tax reductions were made permanent, individual tax cuts were temporary. Economic forecasts suggest these tax cuts might be extended, providing much-needed certainty for planning.

At Circa Capital, we prepare our clients for any changes, good or bad. Given significant news events this year—the Gaza ceasefire, Ukraine peace talks, DeepSeek’s impact on technology, China’s economic weakness, US tax policy—it’s essential to act proactively rather than reactively.

One of the best strategies for clients is rebalancing their asset mix. The primary decision involves determining the right balance between equity (risk) and bonds (safety). With the stock market’s strong performance over the past two years, we have an opportune moment for taking some profits from companies that have grown a lot, and investing in others that may be a better value, all while making sure we have a good balance between growth and income investments.

We aim to serve our clients not only in an investment role but also as partners. Our goal is to ensure that risk and return, and lifestyle choices are considered to give us the best chance of meeting your needs. To that end, please let us know if you have had any changes to your financial situation you want for us to take into account. We are here to help.

~Steve Davenport, CFA

Advancements in artificial intelligence (AI) are revolutionizing various sectors of the economy, ushering in an era of unprecedented growth and innovation. But while most people focus on tech giants like Meta, Google and Microsoft as some of the biggest potential winners, there are other sectors that also stand to benefit. That includes the healthcare, banking, and energy industries, which are often not thought about when the conversation turns to chatbots.

In the healthcare sector, AI can help improve diagnostics, treatment plans, and patient care. Machine learning algorithms can analyze vast amounts of medical data to detect patterns and diagnose diseases with remarkable accuracy. For instance, AI-powered imaging tools can identify abnormalities in medical scans faster and more accurately than human doctors, leading to earlier detection and treatment of conditions such as cancer.

Additionally, AI can personalize treatment plans based on a patient’s genetic makeup, lifestyle, and medical history, improving outcomes and reducing healthcare costs.
The banking industry is also poised to benefit from AI advancements. AI can enhance fraud detection by identifying unusual transaction patterns and flagging potential security breaches in real-time. This not only protects consumers but also saves financial institutions (and the U.S. government) significant amounts of money.

The energy sector is undergoing a transformation with the help of AI technologies. AI can optimize energy production and distribution by predicting demand patterns and managing grid stability. This proactive approach can significantly improve the reliability and stability of the energy supply.

Not every company we own has a direct connection to AI, but over time, we expect most companies to use AI to improve their businesses. In that respect, we are at the front edge of an evolution for almost every industry, and the companies we own are likely to benefit.

As the holiday season approaches and we look back on an eventful year, we are filled with gratitude for your continued trust and partnership. This year has been remarkable in many ways, and as we approach the joyous time of Christmas, we want to share some reflections and positive outlooks on the investment landscape.

2024 has proven to be a year of resilience. Despite facing various challenges and uncertainties, the markets have shown strong growth and recovery. The Magnificent Seven tech giants have particularly stood out, demonstrating their ability to lead the market and drive innovation. As we move into 2025, we remain confident in our strategy of balanced and diversified investments, ensuring that we are well-positioned to seize opportunities while managing risks.

The new year brings with it new opportunities. The investment landscape is rich with potential. As we look ahead, we are excited about the possibilities that lie within sectors such as artificial intelligence, biotechnology, robotics and computing. Even sleepy sectors like utilities, energy, financial services and consumer-oriented businesses stand to benefit by emerging technologies, software and hardware. By staying informed and adaptable, we will continue to position our portfolios to benefit from these dynamic and promising areas.

As we gather with our loved ones to celebrate Christmas, we are reminded of the things that truly matter—family, friends, and community. In the spirit of the season, we encourage you to take a moment to appreciate the blessings of the past year and to look forward with hope and optimism.

We extend our warmest wishes to you and your families. May your holiday season be filled with joy, love, and laughter. Thank you for being a valued part of our investment community. Here’s to a wonderful Christmas and a successful and prosperous New Year!

It’s been a couple weeks since the election, and life goes on. Over the past year, there were a lot of fears and anger about the extreme views of the presidential candidates. Many people urged others to vote for their candidate or even leave the country if they didn’t win. During these tense times, I tried to stay neutral, as I’m a middle child. Trump won the election and now controls the Senate and House. The media’s predictions of a close race were wrong again!

Our investment portfolios have faced challenges, especially with the focus on the ‘Magnificent Seven’ stocks. While other stocks do matter, the numbers show that these were the leaders, and you needed to own them. We take a balanced approach to avoid too much risk. In 2024, the market rewarded those who invested heavily in these tech giants. We compared this to other times in market history, and it felt familiar. Our portfolios saw great gains, and we still believe in these companies. We also believe in quality businesses that didn’t have huge returns. We keep our investments equal and neutral across different economic sectors.

The election and market changes require us to be patient and calm during these challenging times. As Reinhold Niebuhr said, “Grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference.”

The future leaders in Trump’s administration are still being chosen. The focus areas like taxes, immigration, and international affairs are just starting to be discussed. The next four years will bring actions and reactions to various situations. We don’t know where the markets or economy are headed, but we believe our perspective will help us navigate through it. The debates about who won are over, and we need to focus on what we can control—the present. Our investment decisions will be influenced by the budgets and policies of the next four years. There can be many good ideas, but only time will tell how these challenges are solved. Our portfolios are built with long-term goals in mind, and we believe they are resilient. I hope we can all have more balanced discussions to help everyone succeed. Let’s give each other the space and time to work towards a better country.

~ Steve Davenport, CFA

My grandfather was a Texas oilman. A few times per year, he and the other employees were awarded stock in the company they worked for. It was a bonus. Often it was a few shares. And on those days, when the employees would gather in the cafeteria for lunch, my grandfather would offer to buy shares from anyone who wanted to sell. I can’t say whether he was a particularly shrewd trader, but he knew what the stock was worth to him, and I’m sure he got a good deal. In that way, he accumulated a block of shares over time and the dividends gave him extra cash flow in his retirement.

Once he bought shares, my grandfather never sold. He could have. Any contemporary investor certainly would have, if for no other reason than to diversify. Looking at a chart of the company he owned, there were periods when the value of his holdings went down 50%. Many investors probably would have sold shares during one of those occasions when oil prices, and oil stocks, tanked (remember oil at $10 per barrel in the 1990s?). But, my grandfather didn’t sell even in those periods; the company was worth more to him, as was the consistent stream of dividends the company produced.

Most investors (including most advisors) treat the stock market like it’s a game. They jump on the bandwagon for popular stocks, then dump their holdings at the hint of economic trouble. Having a liquid and electronic stock market makes buying and selling shares easy. But just because we can sell, or buy, doesn’t mean we should. And that’s where my grandfather’s philosophy was a benefit. He recognized there was a real company behind the shares he was buying. That company made products he knew were important, and he respected the company’s history, employees and leadership. And his “stock market”—the cafeteria where he and his coworkers struck handshake deals over coffee and corned beef sandwiches—may have been simplistic, but it definitely was not a game. And what Wall Street analysts thought of his company, or what the Dow did each day, could not have been less important to him.

Election years tend to be volatile for the markets. Investors everywhere, every day, react to the latest news and polls, driving stock prices higher one day and lower the next. And this election year, more than any other, has Americans anxious about the outcome. But during times like this, we should remember that we are investing in great businesses, and great businesses share common traits. They are often the best or only company that does what they do. They are highly profitable. They are financially strong. They have skilled management teams and they retain their customers, even during difficult times. Elections don’t determine the future of companies like these; they serve their customers, their communities, and investors for decades, which is why owning them and holding them is the best long-term investment strategy.

~ Travis Raish, CFA

July and August have been tumultuous for the markets. The stock market in general was down for the month, but it was more pronounced for technology stocks. The ups and downs have been driven mostly by “The Magnificent Seven”. It sounds like the title of a spaghetti western, but these tech-oriented companies have pulled the market up as people have gotten more excited about AI (Artificial Intelligence), and have sold off more dramatically when investors worry about the health of the economy.

As with most market storms like the one recently, there were several factors that increased the velocity of declines:

• The Japanese market was down 10%
• Weak jobs data was reported by the Bureau of Labor Statistics
• Warren Buffett sold half of his stake in Apple (a Magnificent Seven company)
• The US market had been getting more expensive

In response to the market’s declines, investors were clamoring for the Fed to take heed of their suffering, and to hold an emergency meeting to lower interest rates. In fact, many “experts” believe the Fed should have already started lowering interest rates to help borrowers, the economy, and ultimately the stock market. Then the Fed met and said they may lower rates in September, later than many investors would like.

While this market storm was underway, a real storm in the form of Hurricane Debby was approaching. Storms gather momentum as they sit over the ocean and spin. Debby hit Florida with a fury and people were surprised by how much damage it brought. And like so many storms of this magnitude, the people hurt the worst were largely those living in homes that weren’t built or were ill-equipped to handle hurricane-force winds and storm surge.

There will be storms, financial and real, and we rarely know far in advance when they are going to hit. And unlike homeowners in coastal Florida who may have difficulty reinforcing a home to withstand a hurricane, investors have easy to implement strategies to help their portfolio withstand a market storm. These include diversifying our portfolios, buying quality companies and having the wherewithal to stay invested through good and bad times. In doing so, we face the challenges of life with our head up.

There will always be a Debby and a decline on the horizon. Let’s make sure we are ready.

~ Steve Davenport, CFA

Investors have changed little over the past 30 years. They still clamor for growth stocks, especially those at the forefront of technological developments. This is especially true today of companies that are working to develop artificial intelligence. And one such company, Nvidia (NVDA), has come from relative obscurity just a few years ago to become one of the largest and most popular companies in the world among investors. But as challenging as it is to become one of the best, staying at the top can be even more difficult.

In 1993, Intel (INTC) was one of the largest and most highly regarded tech companies. Famous for Moore’s Law, an observation that says that semiconductors can get 40% faster every two years through advancements in technology, the company provided computer chips to nearly every major computer manufacturer. Intel Inside was a sticker companies wanted on their products, and just like Nvidia today, Intel’s products were used by the best companies producing the best technologies. As an analyst working at a growth stock investment company, there wasn’t a mutual fund that we offered that did not contain shares of Intel. And to put things in perspective, a $10,000 investment in 1993 would be worth $100,000 today. That’s not too shabby if you had the wherewithal to buy and hold Intel over the past 30 years.

In contrast, there was another chip company back in 1993 that wasn’t nearly as popular, especially among growth investors. The company was roughly the same size as Intel. But this company’s executives didn’t care about Moore’s Law, and they certainly never lost sleep about how many transistors could fit on a computer chip—that’s because their chips are not made from silicone, but from potatoes. Pepsi (PEP), the maker of soft drinks and snack foods like Lays Potato Chips, was boring as a company and as an investment. As a 24-year-old investment analyst, I ate potato chips, but I certainly didn’t want to invest in them. At the fund company, we may have had one mutual fund with an investment in Pepsi and most of us thought about it as an investment for old people who want dividends, but not for anyone who wants to grow their portfolio. Ironically, however, $10,000 invested in that unglamorous chip company would be worth $165,000 today.

The point is that some of the best investments are not in the most glamorous, popular, or exciting companies. But good companies, regardless of industry, often produce products and services that are highly profitable. And because many of these companies are “boring” they have few challengers trying to steal market share from them. When was the last time you heard about some startup trying to take down Pepsi? On the other hand, with microchips that sell for $25,000 apiece, every company even remotely tied to tech is trying to chip away at Nvidia’s lead. This is not to say that Nvidia is going to fall apart, or that the stock is going to tank. But it is to say that the combination of high profits and high profile can be challenging to maintain. The good news is that we don’t have to pick just one—Nvidia or Pepsi—we can have both … and we do.

~ Travis Raish, CFA