The concept of “evolution” in financial markets refers to taking advantage of new, sometimes disruptive opportunities within economic, market, or policy environments. If we look at the financial market as a complex living organism, we can view these times we’re living in as a phase in the process of evolution; with market trends serving as evolution’s process of natural selection.
Simply put, we are on the cusp of radical change that will be reflected in the financial markets, domestic and global economies, and geopolitics. On the upside, change can bring opportunities. On the downside, change can also bring risks.

So, how do you minimize your investment portfolio’s risk while benefitting from evolving opportunities?

When I came up in the financial services industry in the 80’s, training programs stressed something we take for granted today.  At that time, foreign stocks were considered riskier and more volatile than U.S. stocks, and few portfolios contained them.
We found however, that when quality foreign stocks were added to a portfolio of 100% domestic stocks, the more diversified portfolios experienced higher returns with lower volatility.
Today, that still holds true. The goal of a financial advisor is to design portfolios that achieve higher returns and lower volatility: Higher returns that can result from opportunities in evolving technologies, monetary and fiscal policies, and geopolitics; and lower volatility that can result from strategic diversification – diversification not only of asset classes, but also of sectors, industries, and currencies.
Especially in volatile times in the market and economy, it is also very important that you select a financial advisor who is a fiduciary; whose highest priority is serving the best interests of their clients;  and whose philosophy and personality are compatible with your own.
Most advisors will provide the standard financial planning services, but they will also specialize in the delivery of those services in one of three general ways.  They can be Asset Gathers, Sell-side Advisor Reps or Portfolio Managers.

The advantage to working with a financial advisor who is also your Portfolio Manager is that the portfolio manager is the decision-maker when it comes to your investments. For example, if you generally like your portfolio but have an issue with one of the funds or a particular stock, would the advisor have the knowledge and experience to respond to your concerns?  Would they have the authority to act? Or must they defer to the Portfolio Manager?
Your advisor should be able to demonstrate diversification of risk. They should have the capacity to evaluate and access all available investment options and make autonomous recommendations; and they should possess the expertise to perform the appropriate due diligence when building, monitoring, and managing your investments. The larger the Assets Under Management, the more important these capabilities become.
An advisor should be able to tell you what criteria is used in the selection of any particular holding.  Performance is a criteria, but in fact is also the result of a multitude of other criteria, including investment philosophy, product, process and price, to name just a few; but past performance is absolutely no guarantee of future returns and in the final analysis, just one of many criteria;

So an advisor must have their own formula for your success.  What is it?

KCG believes that exciting opportunities exist across many sectors and industries today, including but not limited to:
Energy: specifically, in areas that include meeting the increased demand for electricity to fuel artificial intelligence. Nuclear power is getting another look as are alternative energy sources including table salt to power batteries.
In December of 2024, Christopher Mimms in The Wall Street Journal shared this teaser: “Batteries that use sodium (table salt) instead of lithium could allow the U.S. and its allies to create a completely new supply chain for the energy storage taking off across the world.” And the most exciting part?  The U. S. has 92% of the world’s salt reserves.
Last year, Vistra (VST), an independent power producer and energy trader, completed a merger with Energy Harbor, expanding Vistra’s retail customer base and its nuclear power portfolio. In 2024, Vistra’s stock was up 257.92% year-to-date over Nvidia which was only up 177.63% YTD. Yet, how many of you have heard of Vistra? (Source: finance.yahoo.com Comparison chart 12/31/2023-12/31/2024)
Financials: Clients and colleagues who have followed me for a while know I’ve been talking about the sea-change a reversal of our fiscal policies may trigger.
We have a new perspective.
While on a relative basis, the U.S. dollar is still perceived as the most powerful currency, BRICS (Brazil, Russia, India, China, South Africa) met in Russia at the end of October 2024. Control over natural resources and acceptance of a currency to outperform the U.S. were top on the agenda. Attendees included Turkey, Iran and the UN Secretary-General. They discussed deepening financial cooperation to counterbalance Western-dominated payment systems including SWIFT. Transactions facilitated by SWIFT are denominated in dollars, further solidifying the U.S.’s economic influence. De-dollarization efforts continue globally. (Source: richmondfed.org)
BRICS has made no secret that their top priority is to develop a currency that will replace the dollar as the world’s default currency.  Not pegged to gold since the Nixon administration, Nixon unpegged the dollar from gold to protect it from collapsing under the weight of U.S. foreign debt.  Later in the Nixon administration, Kissinger pegged it to oil with the Petrodollar agreement.  In exchange for U.S. miliary support, Saudi Arabia would sell oil only in dollars.  After 50 years, last August, Saudi Arabia declined to renew the Petrodollar agreement, so at this time, the dollar is no longer backed by hard assets of any kind.
It may be too late to stop the creation of a new default currency, but expect the U.S. dollar to strengthen in the upcoming administration and the U.S. to have a strategic role in any new default currency established. Because the dollar is in play, it is interesting to consider the stocks and bonds of U.S. domiciled, multi-national corporations with the potential to pivot between currencies.