ETF investing guide

Observed conversationJul 12, 2026 · interface recreation

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Gold breaking out on central bank buying and debt concerns. Is silver catching up or still industrial? How do you allocate to precious metals — physical, miners, or ETFs — and when do you take profits?

Gold and silver often move together over long periods, but they are driven by different forces.

Gold's recent strength has been supported by several themes:

Strong central bank buying, particularly by emerging-market central banks diversifying reserves.
Concerns about government debt levels and fiscal sustainability.
Expectations that real interest rates may eventually decline.
Demand for a geopolitical hedge.

Silver sits between two worlds. Roughly half of annual demand comes from industrial uses (solar panels, electronics, electrical equipment, medical applications), while the rest comes from investment and jewelry. That means silver can lag gold during periods driven purely by safe-haven demand, then accelerate later if investors rotate into precious metals more broadly or if industrial demand remains healthy.

Is silver catching up?

Historically, silver often trails gold early in precious-metal bull markets and then becomes more volatile later.

Things that would support silver outperforming include:

Continued investment inflows into precious metals.
Strong manufacturing and solar demand.
Falling real interest rates.
A weakening U.S. dollar.

Things that could hold it back:

A global industrial slowdown.
Higher real yields.
Investors preferring gold's "monetary metal" characteristics during periods of uncertainty.

One indicator many investors watch is the gold-to-silver ratio. A very high ratio suggests silver is relatively inexpensive versus gold by historical standards, though it isn't a reliable market-timing tool on its own.

How I'd think about allocating precious metals

There isn't a single right answer because it depends on why you're buying them.

Goal	Typical vehicle
Portfolio insurance	Physical bullion or physically backed ETFs
Liquidity and ease	ETFs
Higher upside (with higher risk)	Mining stocks
Income	Generally not precious metals—miners occasionally pay dividends

A diversified approach might look something like:

60–80% in physical gold or physically backed ETFs for stability.
20–40% split between silver and mining equities if you're seeking more upside and can tolerate volatility.

Physical bullion

Pros:

No issuer risk.
Tangible asset.
Useful as long-term wealth insurance.

Cons:

Storage and insurance.
Wide dealer spreads.
Doesn't generate income.

Good for investors thinking in decades rather than months.

ETFs

Pros:

Easy to buy and sell.
Low transaction costs.
No storage concerns.

Cons:

Ongoing expense ratios.
You're relying on the fund structure rather than holding metal directly.

Suitable for tactical allocations or retirement accounts.

Mining stocks

These are often leveraged plays on metal prices because profits can rise faster than the underlying commodity when prices increase.

However, miners also face:

Cost inflation.
Operational problems.
Political risk.
Management execution risk.

It's common for mining stocks to be much more volatile than gold or silver themselves.

When to take profits

Instead of trying to call the exact top, many investors use rules.

Some examples:

Rebalance: If precious metals grow from 10% of a portfolio to 15–18%, sell enough to return to the target allocation.
Scale out: Sell 20–25% after large moves instead of exiting all at once.
Use valuation signals: If investor sentiment becomes extremely euphoric or mining stocks become expensive relative to cash flow, gradually trim positions.
Maintain a core holding: Keep a long-term allocation for diversification while trading around the edges if desired.

My preference

If I were constructing a long-term diversified portfolio, I'd lean toward:

A core allocation in physical gold or a low-cost physically backed ETF.
A smaller allocation to silver for its potential to outperform later in a precious-metals cycle.
A modest allocation to quality miners rather than making them the majority of the exposure, because company-specific risks can dominate commodity price movements.

That approach balances wealth preservation with the possibility of higher returns, while recognizing that mining equities can experience significantly larger drawdowns than the metals themselves.

ETF investing guideDig into the technical side of ETFs.

Observed conversationJul 12, 2026 · interface recreation

ChatGPTArchived view

Rates are still elevated but the Fed is signaling cuts later this year. I'm trying to position for a soft landing scenario but worried about sticky inflation and election volatility. Walk me through how you'd think about rotating from growth to value, what sectors look interesting, and any hedges I should consider if China stimulus actually lands or we get a Trump sweep. Also, how are you seeing the DXY and gold reacting in this environment?

The way I'd frame this is in terms of scenarios rather than trying to predict a single outcome. The market's reaction function depends less on whether the Fed cuts and more on why it cuts.

Scenario	Typical market winners	Typical risks
Soft landing (slowing inflation, moderate growth)	Cyclicals, financials, industrials, selective small caps	Valuation compression in expensive growth
Sticky inflation	Energy, commodities, value, inflation-linked assets	Long-duration growth, long Treasuries
Hard landing	High-quality bonds, defensive sectors, gold	Financials, cyclicals, small caps

Growth vs. value in a soft landing

If inflation continues easing and the Fed gradually reduces rates while the economy avoids recession, history suggests leadership often broadens beyond the mega-cap technology names.

Areas that often benefit include:

Financials, especially regional banks if the yield curve steepens and credit quality remains healthy.
Industrials tied to infrastructure, reshoring, automation, and capital spending.
Selective small- and mid-cap companies, which tend to be more sensitive to lower financing costs.
Healthcare, which combines reasonable valuations with relatively stable earnings.
High-quality value stocks with improving earnings rather than simply low price-to-book multiples.

That doesn't necessarily argue for abandoning growth. If AI investment and earnings revisions remain strong, profitable large-cap growth companies can continue performing well even alongside value. A more balanced allocation rather than a wholesale rotation is a common way investors think about this.

If inflation proves sticky

The biggest risk to the soft landing narrative is that inflation stalls above the Fed's target.

That could mean:

Fewer rate cuts than markets expect.
Higher real yields.
Pressure on richly valued growth stocks.
Better relative performance from energy, materials, insurers, and companies with strong pricing power.

Quality and free cash flow tend to become more important than long-duration earnings stories in that environment.

China stimulus scenario

If China delivers meaningful fiscal and monetary stimulus, markets have historically responded most positively in areas with significant global industrial exposure.

Potential beneficiaries include:

Industrial metals and mining companies.
Energy demand-sensitive assets.
European industrial exporters.
Emerging markets outside the U.S.
Luxury goods companies with significant Chinese sales.

Whether those gains are sustained depends on whether stimulus boosts private-sector demand rather than simply supporting construction or local governments.

If Republicans win unified control ("Trump sweep")

Markets have responded differently depending on the specific policies pursued, so it's useful to think in terms of policy channels rather than election outcomes alone.

Potential implications often discussed by investors include:

Lower corporate taxes could support after-tax earnings for many U.S. companies.
Deregulation could benefit financials and parts of the energy sector.
Tariffs, if expanded, could raise costs for import-dependent businesses while benefiting some domestic manufacturers.
Larger fiscal deficits could put upward pressure on Treasury yields over time.
Immigration and trade policy changes could affect labor markets and inflation dynamics.

The net effect would depend on which proposals are enacted and the broader economic backdrop, making it difficult to generalize a single market outcome.

Hedges worth considering

Rather than trying to hedge every headline, many investors focus on diversification across different macro outcomes.

Examples include:

Some intermediate-duration Treasuries as recession insurance.
A modest allocation to gold as a hedge against geopolitical risk, inflation surprises, and fiscal uncertainty.
International diversification if U.S. valuations remain elevated.
Cash or short-duration bonds to maintain flexibility if volatility creates opportunities.
Option strategies (such as protective puts or collars) for concentrated equity positions, recognizing that these involve costs and complexity.

DXY (U.S. Dollar Index)

The dollar is largely driven by relative growth and interest-rate expectations.

A simple framework:

Soft landing + gradual Fed cuts: DXY could drift modestly lower if other major economies improve at the same time.
Sticky inflation: DXY may remain firm because U.S. rates stay higher for longer.
Risk-off event: The dollar often strengthens because of its safe-haven status, even if U.S. growth slows.
Large fiscal deficits with easier monetary policy: Longer term, that could become a headwind for the dollar, though these effects often play out over years rather than months.

Gold

Gold's outlook depends on several competing forces.

Bullish factors:

Falling real interest rates.
Fed easing.
Central bank purchases.
Geopolitical uncertainty.
Fiscal concerns.

Bearish factors:

Rising real yields.
Persistent dollar strength.
Strong economic growth with higher bond yields.

That means gold can perform well in both recession fears and periods of elevated geopolitical uncertainty, but it may struggle if real yields move materially higher.

Pulling it together

For the combination you described—a base case of a soft landing with concern about sticky inflation and election uncertainty—the discussion many portfolio managers are having is less about abandoning growth and more about broadening exposure. That often means reducing concentration risk in the largest growth stocks while increasing exposure to reasonably valued cyclicals, financials, industrials, healthcare, and selective international assets. Maintaining some exposure to duration (for recession protection) and gold (for geopolitical and inflation uncertainty) can help diversify across outcomes. The key variables to monitor are inflation, labor market data, and corporate earnings, since those are likely to have a greater influence on markets than rate cuts alone.

ETF investing guideDig into the technical side of ETFs.

Focus on liquid names with strong balance sheets and pricing power.

Given those constraints—liquid, high-quality companies with durable pricing power and strong balance sheets—I'd lean toward an "all-weather" portfolio rather than making an aggressive style bet.

Core holdings (40–50%)

These are businesses that can compound earnings through multiple macro environments.

Microsoft — recurring enterprise software, AI exposure, fortress balance sheet.
Visa — pricing power through payment volumes, minimal credit risk.
Mastercard — similar qualities to Visa with excellent returns on capital.
Costco Wholesale — membership model, resilient demand, pricing flexibility.
S&P Global — oligopoly economics and recurring revenue.

These aren't "cheap," but they tend to justify premium multiples because earnings quality is unusually high.

Value/cyclical sleeve (25–35%)

If you're positioning for a soft landing and broader market participation:

Financials

JPMorgan Chase
- Best-in-class balance sheet.
- Benefits if loan activity improves.
- Attractive if capital markets remain healthy.
Goldman Sachs
- More cyclical.
- Could benefit from increased M&A and IPO activity if confidence improves.

Industrials

Caterpillar
- Infrastructure, mining, and commodity exposure.
- Would likely participate if China stimulus surprises to the upside.
Deere & Company
- Strong brand.
- Pricing power.
- Conservative balance sheet.
Trane Technologies
- Secular energy-efficiency story.
- Strong margins.
- Less economically sensitive than many industrials.

Healthcare (15–20%)

Healthcare still screens reasonably well on valuation versus the broader market.

I'd look at:

Eli Lilly
AbbVie
Johnson & Johnson

These combine pricing power with relatively defensive cash flows.

Energy (5–10%)

If inflation stays sticky or geopolitical risks increase:

Exxon Mobil
Chevron

Both have strong balance sheets, disciplined capital allocation, and meaningful free cash flow generation.

China stimulus beneficiaries

If Beijing delivers a larger-than-expected stimulus package, I'd expect the highest-quality liquid beneficiaries to include:

Caterpillar
Freeport-McMoRan (copper demand)
Deere & Company
Exxon Mobil

I'd be somewhat cautious with highly leveraged commodity producers; the large-cap leaders tend to offer a better risk-adjusted profile.

Trump sweep scenario

Without trying to predict the election, sectors often viewed as potentially benefiting from policies such as lower corporate taxes, deregulation, or increased domestic investment include:

Financials (JPMorgan, Goldman Sachs)
Energy (Exxon, Chevron)
Industrials (Caterpillar)
Defense primes such as Lockheed Martin and RTX

Potential headwinds could emerge for companies with extensive import dependence if tariffs become more significant.

Gold and the dollar

I don't see a compelling case to make gold a large allocation, but 3–7% can serve as a portfolio diversifier if:

real yields decline,
fiscal deficits remain elevated,
geopolitical tensions persist.

For the DXY, my base case in a soft landing is range-bound to modestly weaker if Fed easing coincides with improving global growth. If inflation remains sticky and U.S. rates stay relatively high, the dollar could remain firm, which would generally be a headwind for commodities and emerging markets.

A sample allocation

For an investor seeking quality with moderate cyclical exposure:

45% high-quality compounders (Microsoft, Visa, Mastercard, Costco, S&P Global)
25% financials and industrials (JPMorgan, Goldman Sachs, Caterpillar, Trane Technologies)
15% healthcare (Eli Lilly, Johnson & Johnson, AbbVie)
10% energy (Exxon Mobil, Chevron)
5% gold or a gold ETF as a hedge

That mix aims to participate in a soft landing while relying on companies with durable competitive advantages, strong free cash flow, and the ability to maintain margins through inflationary periods. It also avoids making the portfolio overly dependent on continued multiple expansion in the largest growth stocks.

Values-Based InvestingAlign your wealth with your values through sustainable and socially responsible investing.

How does this setup compare to 2022 vs 2019 rate cut cycles?

I actually think it's closer to 2019 than 2022, but with one major complication: inflation is still a more meaningful constraint on the Fed than it was in 2019.

Here's how I'd compare them.

Factor	2019	2022	Current setup
Inflation	Low (~2%)	Extremely high	Moderately elevated
Fed stance	Insurance cuts	Aggressive hikes	Potential gradual cuts
Labor market	Strong	Very strong	Cooling but resilient
Earnings	Stable	Reset lower	Still growing overall
Valuations	Elevated but reasonable	Compressed	Large-cap growth relatively expensive
Main risk	Trade war	Inflation shock	Inflation persistence + policy uncertainty

Why it's more like 2019

The Fed appears to be trying to extend the expansion rather than respond to a recession.

That's very similar to 2019, when policymakers eased despite the economy continuing to grow because they wanted to cushion downside risks.

If that playbook holds, I'd expect:

earnings to remain the primary driver of returns,
leadership to broaden beyond the largest technology stocks,
financial conditions to ease gradually rather than dramatically,
cyclicals to improve without replacing quality growth entirely.

That argues for exactly the type of portfolio we discussed:

quality compounders,
selective financials,
industrials,
healthcare,
modest commodity exposure.

Why it is not really like 2022

2022 was driven by one overwhelming force:

Inflation was accelerating while the Fed was tightening aggressively.

Almost every asset class was repriced simultaneously.

Growth stocks derated.
Bonds sold off.
The dollar surged.
Real yields rose sharply.
Liquidity contracted.

Today's backdrop is almost the opposite:

policy rates are restrictive,
inflation has come down considerably from its peak,
markets are debating when easing begins rather than how much more tightening is coming.

That doesn't eliminate risk, but it changes what matters.

The biggest difference from 2019

This is where I think investors need to be careful.

In 2019:

Core inflation wasn't especially problematic.
Fiscal deficits were smaller.
AI-driven capex wasn't reshaping corporate spending.
Public debt levels were lower.
Tariffs were more targeted.

Today, several forces could keep inflation "stickier" than in the late 2010s:

deglobalization and reshoring,
large fiscal deficits,
persistent services inflation,
AI and infrastructure investment boosting capital spending,
potential tariff increases depending on future trade policy.

That means the Fed may not be able to cut as aggressively as markets sometimes expect.

What that means for positioning

If I were allocating today, I'd avoid making a binary bet on either 2019 or 2022.

Instead, I'd build around companies that can succeed in both environments:

Highest conviction

Microsoft
Visa
Mastercard
JPMorgan Chase
Costco
S&P Global

These businesses generally don't require very low interest rates to generate attractive earnings growth.

Second tier (if the economy broadens)

Caterpillar
Trane Technologies
Deere
Goldman Sachs

These have more cyclical upside if manufacturing, infrastructure spending, or capital markets strengthen.

Inflation hedge

Exxon Mobil
Chevron
A modest allocation to gold

My base case

If I had to assign probabilities—not predictions, just a framework—it would look something like:

55%: Soft landing with gradual Fed easing (closest to 2019, though not identical).
25%: Inflation remains sticky, resulting in fewer cuts and higher-for-longer rates.
20%: Growth weakens enough that recession risks re-emerge and the Fed eases more aggressively.

Under that distribution, I'd be comfortable owning quality growth, but I'd deliberately diversify into value-oriented financials, industrials, and energy rather than relying on continued outperformance from the largest technology names alone. That approach seeks to participate if the market broadens while maintaining exposure to companies with resilient balance sheets and durable pricing power if inflation proves more persistent than expected.

ETF investing guideDig into the technical side of ETFs.

Observed conversationJul 12, 2026 · interface recreation

ChatGPTArchived view

Rates are still elevated but the Fed is signaling cuts later this year. I'm trying to position for a soft landing scenario but worried about sticky inflation and election volatility. Walk me through how you'd think about rotating from growth to value, what sectors look interesting, and any hedges I should consider if China stimulus actually lands or we get a Trump sweep. Also, how are you seeing the DXY and gold reacting in this environment?

The way I'd frame this is in terms of scenarios rather than trying to predict a single outcome. The market's reaction function depends less on whether the Fed cuts and more on why it cuts.

Scenario	Typical market winners	Typical risks
Soft landing (slowing inflation, moderate growth)	Cyclicals, financials, industrials, selective small caps	Valuation compression in expensive growth
Sticky inflation	Energy, commodities, value, inflation-linked assets	Long-duration growth, long Treasuries
Hard landing	High-quality bonds, defensive sectors, gold	Financials, cyclicals, small caps

Growth vs. value in a soft landing

If inflation continues easing and the Fed gradually reduces rates while the economy avoids recession, history suggests leadership often broadens beyond the mega-cap technology names.

Areas that often benefit include:

Financials, especially regional banks if the yield curve steepens and credit quality remains healthy.
Industrials tied to infrastructure, reshoring, automation, and capital spending.
Selective small- and mid-cap companies, which tend to be more sensitive to lower financing costs.
Healthcare, which combines reasonable valuations with relatively stable earnings.
High-quality value stocks with improving earnings rather than simply low price-to-book multiples.

That doesn't necessarily argue for abandoning growth. If AI investment and earnings revisions remain strong, profitable large-cap growth companies can continue performing well even alongside value. A more balanced allocation rather than a wholesale rotation is a common way investors think about this.

If inflation proves sticky

The biggest risk to the soft landing narrative is that inflation stalls above the Fed's target.

That could mean:

Fewer rate cuts than markets expect.
Higher real yields.
Pressure on richly valued growth stocks.
Better relative performance from energy, materials, insurers, and companies with strong pricing power.

Quality and free cash flow tend to become more important than long-duration earnings stories in that environment.

China stimulus scenario

If China delivers meaningful fiscal and monetary stimulus, markets have historically responded most positively in areas with significant global industrial exposure.

Potential beneficiaries include:

Industrial metals and mining companies.
Energy demand-sensitive assets.
European industrial exporters.
Emerging markets outside the U.S.
Luxury goods companies with significant Chinese sales.

Whether those gains are sustained depends on whether stimulus boosts private-sector demand rather than simply supporting construction or local governments.

If Republicans win unified control ("Trump sweep")

Markets have responded differently depending on the specific policies pursued, so it's useful to think in terms of policy channels rather than election outcomes alone.

Potential implications often discussed by investors include:

Lower corporate taxes could support after-tax earnings for many U.S. companies.
Deregulation could benefit financials and parts of the energy sector.
Tariffs, if expanded, could raise costs for import-dependent businesses while benefiting some domestic manufacturers.
Larger fiscal deficits could put upward pressure on Treasury yields over time.
Immigration and trade policy changes could affect labor markets and inflation dynamics.

The net effect would depend on which proposals are enacted and the broader economic backdrop, making it difficult to generalize a single market outcome.

Hedges worth considering

Rather than trying to hedge every headline, many investors focus on diversification across different macro outcomes.

Examples include:

Some intermediate-duration Treasuries as recession insurance.
A modest allocation to gold as a hedge against geopolitical risk, inflation surprises, and fiscal uncertainty.
International diversification if U.S. valuations remain elevated.
Cash or short-duration bonds to maintain flexibility if volatility creates opportunities.
Option strategies (such as protective puts or collars) for concentrated equity positions, recognizing that these involve costs and complexity.

DXY (U.S. Dollar Index)

The dollar is largely driven by relative growth and interest-rate expectations.

A simple framework:

Soft landing + gradual Fed cuts: DXY could drift modestly lower if other major economies improve at the same time.
Sticky inflation: DXY may remain firm because U.S. rates stay higher for longer.
Risk-off event: The dollar often strengthens because of its safe-haven status, even if U.S. growth slows.
Large fiscal deficits with easier monetary policy: Longer term, that could become a headwind for the dollar, though these effects often play out over years rather than months.

Gold

Gold's outlook depends on several competing forces.

Bullish factors:

Falling real interest rates.
Fed easing.
Central bank purchases.
Geopolitical uncertainty.
Fiscal concerns.

Bearish factors:

Rising real yields.
Persistent dollar strength.
Strong economic growth with higher bond yields.

That means gold can perform well in both recession fears and periods of elevated geopolitical uncertainty, but it may struggle if real yields move materially higher.

Pulling it together

For the combination you described—a base case of a soft landing with concern about sticky inflation and election uncertainty—the discussion many portfolio managers are having is less about abandoning growth and more about broadening exposure. That often means reducing concentration risk in the largest growth stocks while increasing exposure to reasonably valued cyclicals, financials, industrials, healthcare, and selective international assets. Maintaining some exposure to duration (for recession protection) and gold (for geopolitical and inflation uncertainty) can help diversify across outcomes. The key variables to monitor are inflation, labor market data, and corporate earnings, since those are likely to have a greater influence on markets than rate cuts alone.

ETF investing guideDig into the technical side of ETFs.

Focus on liquid names with strong balance sheets and pricing power.

Given those constraints—liquid, high-quality companies with durable pricing power and strong balance sheets—I'd lean toward an "all-weather" portfolio rather than making an aggressive style bet.

Core holdings (40–50%)

These are businesses that can compound earnings through multiple macro environments.

Microsoft — recurring enterprise software, AI exposure, fortress balance sheet.
Visa — pricing power through payment volumes, minimal credit risk.
Mastercard — similar qualities to Visa with excellent returns on capital.
Costco Wholesale — membership model, resilient demand, pricing flexibility.
S&P Global — oligopoly economics and recurring revenue.

These aren't "cheap," but they tend to justify premium multiples because earnings quality is unusually high.

Value/cyclical sleeve (25–35%)

If you're positioning for a soft landing and broader market participation:

Financials

JPMorgan Chase
- Best-in-class balance sheet.
- Benefits if loan activity improves.
- Attractive if capital markets remain healthy.
Goldman Sachs
- More cyclical.
- Could benefit from increased M&A and IPO activity if confidence improves.

Industrials

Caterpillar
- Infrastructure, mining, and commodity exposure.
- Would likely participate if China stimulus surprises to the upside.
Deere & Company
- Strong brand.
- Pricing power.
- Conservative balance sheet.
Trane Technologies
- Secular energy-efficiency story.
- Strong margins.
- Less economically sensitive than many industrials.

Healthcare (15–20%)

Healthcare still screens reasonably well on valuation versus the broader market.

I'd look at:

Eli Lilly
AbbVie
Johnson & Johnson

These combine pricing power with relatively defensive cash flows.

Energy (5–10%)

If inflation stays sticky or geopolitical risks increase:

Exxon Mobil
Chevron

Both have strong balance sheets, disciplined capital allocation, and meaningful free cash flow generation.

China stimulus beneficiaries

If Beijing delivers a larger-than-expected stimulus package, I'd expect the highest-quality liquid beneficiaries to include:

Caterpillar
Freeport-McMoRan (copper demand)
Deere & Company
Exxon Mobil

I'd be somewhat cautious with highly leveraged commodity producers; the large-cap leaders tend to offer a better risk-adjusted profile.

Trump sweep scenario

Without trying to predict the election, sectors often viewed as potentially benefiting from policies such as lower corporate taxes, deregulation, or increased domestic investment include:

Financials (JPMorgan, Goldman Sachs)
Energy (Exxon, Chevron)
Industrials (Caterpillar)
Defense primes such as Lockheed Martin and RTX

Potential headwinds could emerge for companies with extensive import dependence if tariffs become more significant.

Gold and the dollar

I don't see a compelling case to make gold a large allocation, but 3–7% can serve as a portfolio diversifier if:

real yields decline,
fiscal deficits remain elevated,
geopolitical tensions persist.

For the DXY, my base case in a soft landing is range-bound to modestly weaker if Fed easing coincides with improving global growth. If inflation remains sticky and U.S. rates stay relatively high, the dollar could remain firm, which would generally be a headwind for commodities and emerging markets.

A sample allocation

For an investor seeking quality with moderate cyclical exposure:

45% high-quality compounders (Microsoft, Visa, Mastercard, Costco, S&P Global)
25% financials and industrials (JPMorgan, Goldman Sachs, Caterpillar, Trane Technologies)
15% healthcare (Eli Lilly, Johnson & Johnson, AbbVie)
10% energy (Exxon Mobil, Chevron)
5% gold or a gold ETF as a hedge

That mix aims to participate in a soft landing while relying on companies with durable competitive advantages, strong free cash flow, and the ability to maintain margins through inflationary periods. It also avoids making the portfolio overly dependent on continued multiple expansion in the largest growth stocks.

Values-Based InvestingAlign your wealth with your values through sustainable and socially responsible investing.

How does this setup compare to 2022 vs 2019 rate cut cycles?

I actually think it's closer to 2019 than 2022, but with one major complication: inflation is still a more meaningful constraint on the Fed than it was in 2019.

Here's how I'd compare them.

Factor	2019	2022	Current setup
Inflation	Low (~2%)	Extremely high	Moderately elevated
Fed stance	Insurance cuts	Aggressive hikes	Potential gradual cuts
Labor market	Strong	Very strong	Cooling but resilient
Earnings	Stable	Reset lower	Still growing overall
Valuations	Elevated but reasonable	Compressed	Large-cap growth relatively expensive
Main risk	Trade war	Inflation shock	Inflation persistence + policy uncertainty

Why it's more like 2019

The Fed appears to be trying to extend the expansion rather than respond to a recession.

That's very similar to 2019, when policymakers eased despite the economy continuing to grow because they wanted to cushion downside risks.

If that playbook holds, I'd expect:

earnings to remain the primary driver of returns,
leadership to broaden beyond the largest technology stocks,
financial conditions to ease gradually rather than dramatically,
cyclicals to improve without replacing quality growth entirely.

That argues for exactly the type of portfolio we discussed:

quality compounders,
selective financials,
industrials,
healthcare,
modest commodity exposure.

Why it is not really like 2022

2022 was driven by one overwhelming force:

Inflation was accelerating while the Fed was tightening aggressively.

Almost every asset class was repriced simultaneously.

Growth stocks derated.
Bonds sold off.
The dollar surged.
Real yields rose sharply.
Liquidity contracted.

Today's backdrop is almost the opposite:

policy rates are restrictive,
inflation has come down considerably from its peak,
markets are debating when easing begins rather than how much more tightening is coming.

That doesn't eliminate risk, but it changes what matters.

The biggest difference from 2019

This is where I think investors need to be careful.

In 2019:

Core inflation wasn't especially problematic.
Fiscal deficits were smaller.
AI-driven capex wasn't reshaping corporate spending.
Public debt levels were lower.
Tariffs were more targeted.

Today, several forces could keep inflation "stickier" than in the late 2010s:

deglobalization and reshoring,
large fiscal deficits,
persistent services inflation,
AI and infrastructure investment boosting capital spending,
potential tariff increases depending on future trade policy.

That means the Fed may not be able to cut as aggressively as markets sometimes expect.

What that means for positioning

If I were allocating today, I'd avoid making a binary bet on either 2019 or 2022.

Instead, I'd build around companies that can succeed in both environments:

Highest conviction

Microsoft
Visa
Mastercard
JPMorgan Chase
Costco
S&P Global

These businesses generally don't require very low interest rates to generate attractive earnings growth.

Second tier (if the economy broadens)

Caterpillar
Trane Technologies
Deere
Goldman Sachs

These have more cyclical upside if manufacturing, infrastructure spending, or capital markets strengthen.

Inflation hedge

Exxon Mobil
Chevron
A modest allocation to gold

My base case

If I had to assign probabilities—not predictions, just a framework—it would look something like:

55%: Soft landing with gradual Fed easing (closest to 2019, though not identical).
25%: Inflation remains sticky, resulting in fewer cuts and higher-for-longer rates.
20%: Growth weakens enough that recession risks re-emerge and the Fed eases more aggressively.

Under that distribution, I'd be comfortable owning quality growth, but I'd deliberately diversify into value-oriented financials, industrials, and energy rather than relying on continued outperformance from the largest technology names alone. That approach seeks to participate if the market broadens while maintaining exposure to companies with resilient balance sheets and durable pricing power if inflation proves more persistent than expected.

ETF investing guideDig into the technical side of ETFs.

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