July Newsletter 2025
July 3, 2025
“In Times Like These…”
Dear Client,
This past month, headlines were once again filled with global uncertainty. Conflict escalated between Israel and Iran and then our US military took action to halt Iran’s nuclear program. After this a cease fire was negotiated between Israel and Iran. While the military exchange captured the world's attention and understandably raised fears, it is important to note that the market reaction was relatively muted before moving solidly in a positive direction over this past week. Investors often respond strongly to surprises, but in this case, the risks have already been partially priced into global markets. We continue to monitor developments for market opportunities, but we remain focused on long-term fundamentals and disciplined portfolio management.
Closer to home, legislative momentum has picked up in Washington as President Trump’s tax-and-spending package, the “One Big Beautiful Bill” was finalized today and passed by both chambers of congress. It extends business benefits established in 2017 tax law, introduced new tax cuts and scaled back a range of clean-energy incentives and social safety net programs. Many provisions carry implications for individual and business planning. Additionally, the next round of tariff adjustments will go into effect as we reach the July 9th 90 day pause deadline. We continue to monitor these developments closely and are prepared to stay active based on this new legislation and the impact of the next round of tariffs. So far, the tax bill has been a catalyst for driving up the market.
With the passage of this bill and the potential to increase national debt substantially, most view the growing national debt with increasing concern. Common myths persist, such as the debt is harmless because "we owe it to ourselves," when in fact a substantial portion is held by foreign governments and private investors, making the implications more complex. Others say that debt concerns have existed for decades without major consequences. In today’s environment, marked by higher interest rates, demographic shifts, and global uncertainties, increasing debt presents greater risks including the potential for collapse of the dollar. Most economists speculate this is unlikely, but a gradual erosion of confidence remains possible. The national debt continues to raise questions about fiscal sustainability and long-term economic health for many. While federal deficits are large and total debt now exceeds $34 trillion dollars, another factor beyond the growing size of the debt is the nation's ability to manage interest costs, support economic growth, and meet future obligations.
In times like these, it is natural to feel a mix of optimism and pessimism about all the activity happening in the world. We remain active as always in our portfolio strategy. We want you to know that we remain grounded in our investment discipline and focused on the priorities that matter most. Whether it is navigating international conflicts, adapting to tax law changes, or thinking through long-term implications of national debt, our responsibility is to bring clarity, calm, and well-informed active management to your portfolio and financial planning concerns.
Moving beyond the current events that are driving today’s financial news cycles, such as earnings expectations, latest job growth numbers and the latest GDP estimates, we enter the second half of the year optimistic that the economy will grow and investors will continue to benefit from our active management.
On the portfolio management front, we believe it is now wise to add Blackstone Inc. (BX) to certain client portfolios because of its strong size, variety of investments, and solid long-term performance. Blackstone currently manages $1.17 trillion in assets, with investments spread across private companies, real estate, lending, and hedge funds. In the first quarter of 2025, the company reported a ten percent increase in revenue compared to the same period last year, while being flush with available capital ready to deploy in the right investments. Its recent shift to a corporate structure has made it easier for a wider range of investors to access the stock, therefore increasing demand for this investment. Blackstone also offers a 3.5 percent dividend and maintains a high operating profit margin of over forty percent, which together provides a good mix of income and growth potential. We believe Blackstone is in a strong position to benefit from the growing demand for alternative investments and to provide long-term value for our clients.
Given the recent developments in the lithium market, we think it is reasonable to modestly increase exposure to Albemarle Corporation (ALB) in some client accounts. While lithium prices have fallen sharply from their 2022 highs, major players have been cutting production and capital expenses, continuing a disciplined response to oversupply, which sets up what might be the perfect buying opportunity. In addition, significant long-term investments by companies such as Rio Tinto, held in many portfolios, reflect the growing conviction that lithium demand will rise steadily for some time to come, especially as global energy supplies evolve and electric vehicle infrastructure takes deeper root in all major economies. Albemarle, as one of the largest and most established lithium producers, remains well-positioned to benefit from future demand while navigating current volatility with a strong balance sheet.
Both Blackstone and Albemarle fall within our Alternative Equity allocation, a category that plays an important role in portfolio diversification and makes up roughly half of the Equity portfolio allocation. Alternative Equities complement the core Domestic Equity holdings in our equities portfolios, especially during periods when those traditional sectors may underperform. By incorporating companies with different drivers of return, such as private market exposure in the case of Blackstone and critical materials exposure through Albemarle, we aim to enhance risk-adjusted performance and strengthen the portfolio's overall resilience across market cycles.
Looking back at portfolio results over the past twelve months ending June 30, 2025, total portfolio returns for the aggregate accounts we managed during that period rose by roughly ten percent. These returns for a single twelve-month period are above average. Typically, we advise and document in Investment Policy Statements, ten-year returns should average roughly six to eight percent.
Quarterly reports will be sent to you in mid-July for your review. Your individual portfolios reflect your unique risk profile and allocations. Please call to schedule an appointment if you would like to review and discuss your reports or any other topics.
With Independence Day upon us, we hope you have a fun and safe holiday. Please take time to reflect on the enduring strength, resilience, and opportunity that define our nation; on the freedoms we enjoy and the principles that continue to shape our shared future.
Sincerely,
Intelligent Investment Management, LLP
