October Client Letter
October 1, 2025
“Voted #1 in Predicting….”
Dear Valued Friends and Clients,
This past month, our family has enjoyed watching our son, Keagan, play on a soccer team for the first time. Seeing him take on new challenges has reminded me that progress often comes through steady effort, even when the game changes direction. The Saturday soccer games have provided a welcome opportunity to step away from our thoughts on market investments, although in many ways, the constant motion of soccer with continuous shifts in direction and momentum mirrors the ever-changing nature of the financial markets.
Turning to market news, beginning in April, the U.S. equity market has continued to reach new heights. For the first time the S&P 500 surpassed 6,700 in September, and the Nasdaq reached new all-time highs. Companies tied to artificial inte
lligence (AI) remain at the center of investor enthusiasm, driving both economic expectations and market performance. Oracle exemplified this continuing trend, with its stock rising more than 36 percent in a single day in September following a company announcement regarding long-term projects driven by AI demand. Beneath these headlines, a more nuanced story is unfolding.
Interest rates for borrowing, inflation increases and decreases and employment data are all interconnected. Labor market data has softened, prompting the Federal Reserve to implement an interest rate cut of .25 percent after the September 17th meeting, with the possibility of additional cuts before year-end. The Federal Reserve continues to navigate a balancing act. Inflation has not receded, yet a softening labor market underscores the need for more supportive monetary policy. This initial rate cut signals the beginning of what could be a meaningful policy shift.
Mortgage rates are not directly correlated to the actions of the Federal Reserve, but they respond to broader financial conditions that the Fed adjustments try to influence. Mortgage rates have already begun to decline, sparking a renewed surge in refinancing activity during September. Should mortgage rates continue to fall, the outlook for the housing market will continue to improve. Lower borrowing costs could not only stimulate home sales but also bolster consumer confidence, potentially providing a stabilizing effect against broader economic slowing.
Recent Mortgage Rate Trend
Date | 30 - Year Mortgage Rate |
August 1, 2025 | 6.72% |
September 1, 2025 | 6.56% |
October 1, 2025 | 6.30% |
IIM, along with most market strategists, expect interest rate declines to remain supportive of equities, which is a significant driver of continued equity market gains. Lower rates tend to encourage investors to seek growth opportunities in stocks. For the second half of 2025, IIM has seen several economists and financial institutions revise their forecasts upward for both global and US economic growth. These revisions reflect strong momentum and a resilient consumer base, underscoring confidence in the strength of the technology sector and overall economic durability. According to the Atlanta Federal Reserve’s “GDP Now” model, the latest forecast as of October first, projects third-quarter 2025 growth to approach four percent (3.8 percent). This is well above the typical two to three percent pace of increase that signals a healthy, expanding economy; one that continues to defy recession concerns. Thinking past 2025, today I read a forecast published by Bank of America economists indicating continued growth in 2026. They note, “while tariff disputes, shifting monetary policy, and political uncertainty have generated significant noise, the drivers of long-term equity returns, productivity, investment, and earnings growth are improving.”
Inflation remains elevated, particularly in sectors affected by tariffs and supply chain disruptions. Rising defense spending has added pressure to key commodities such as copper, a vital component for clean energy, digital infrastructure, and traditional manufacturing. In our Alternate Equity Portfolio, Rio Tinto (RIO), a major copper mining company, has performed well, with shares up over 19 percent this year. Teck Resources Limited (TECK), also a part of our Alternate Equity Portfolio, is another major copper producer, surging more than 28 percent in September alone. This increase was driven by both the announcement of a major merger agreement and the temporary closure of the world’s second-largest copper mine, which tightened global supply and pushed prices higher for this essential commodity.
Over the past few years and throughout this year, the growing demand for infrastructure to support AI, from data centers to advanced computing capacity, has created opportunities across the technology, energy, and commodities sectors. We have seen these benefits reflected in our portfolios. Our primary technology holding, the Columbia Seligman Technology Growth Fund (STK), is up over 26 percent year to date. In the energy sector, Constellation Energy Corp. (CEG) has gained over 48 percent this year. As the largest technology companies in the world continue to invest aggressively, we expect AI to remain a durable force for innovation and growth going forward. AI remains one of the most significant growth drivers of the current bull market cycle, which is now approaching three years of impressive equity market gains.
Portfolio Returns For the Three-Year Period 10-1-2022 through 9-30-2025
Market sentiment today reflects a balance of optimism and caution. While headlines and political debates can make the world feel uncertain and contribute to periods of volatility, investors continue to recognize the importance of diversification and long-term discipline. Current government funding challenges in Washington have not significantly impacted market performance yet. Volatility is a natural part of a functioning and healthy marketplace, and seasoned investors understand that markets will always ebb and flow. Achieving long-term investment objectives requires preparation, consistency, and a clear focus on the future. We will provide further commentary should market conditions materially change due to the politics in Washington.
Through all of this, we continue to follow the same disciplined strategy together:
- Diversification to help manage risk.
- Focus on companies with durable fundamentals and profits.
- Rebalancing portfolios to preserve gains and strengthen positioning.
This past quarter IIM has focused on taking profits where appropriate and adding exposure in select Alternative Equity Funds that have performed well. While total returns for the third quarter, for fully diversified clients, ranged from four to five percent, the three main Alternative Equity funds added this quarter grew appreciably. From July 1, through September 30, the aggregate returns were as follows: Blackstone Inc. (BX) 14.8%, Albemarle Corp. (ALB) 30%, and Franco Nevada Corp. (FNV) 42%. We expect lower interest rates to remain supportive of equities through 2025, and we continue to monitor opportunities in technology, energy, and commodities; areas where we see long-term growth potential.
Returns stated in this letter reflect the aggregate portfolio, gross of fees. Please see your enclosed quarterly portfolio report that shows your individual results using net of fees calculations. If you would like to set up a time to review your results, discuss your portfolio in greater detail, or revisit your financial plans, please do not hesitate to contact me.
Before closing, I want to share a brief update regarding our team. With Steve temporarily on medical leave, I will continue as the firm’s advisor and will collaborate with Steve and Jeannie to shape the future of our advisory services. Please be assured that we are working together closely during this time to ensure continuity and to serve all clients with the same care and attention you have come to expect. Our commitment is to manage client relationships in a timely and thoughtful manner, and we remain fully dedicated to delivering the highest level of service possible across the firm. Please do not hesitate to reach out to Laura, Carly, Jeannie, or myself with any questions.
Sincerely,
Intelligent Investment Management
A Message from Steve Wheeldon
Well, I have now completed the first three months of my “BIG C” journey, as my talented team of surgeons, radiologists, oncologists, radiation specialists and MANY other dedicated medical professionals have tackled the “hardest of hard” cancer diagnosis. They all tell me that I am a fighter and that I can look forward to completing my “bucket list” of IWANAS. To that end, the love of my life has stepped up (once again) to make sure I do not miss any “must dos”. Did you know that I am a very big fan of Chris Stapleton? You guessed it, done the same weekend we got the call from the Doc!!! And a Major League baseball nut. Also done as I saw Clayton Kershaw (who wears my lucky number 22 on his chest) pitch in his last pre-retirement regular season game. Anniversary trip to Loreto planned for November. The best Team Manager runs my home support team, Jeannie!
You can see from your quarterly reports that the IIM support team has also “knocked it out of the park”. Mine and Jeannie’s retirement portfolio (invested side-by-side with our clients with similar long-term goals and risk tolerances) will provide the needed financial security to reward Jeannie for her thirty-seven years of “partnering up” with this old CPA, turned Investment Advisor. It appears that I picked a good team of dedicated investment pros to keep “my baby” on course for the foreseeable future. James has fully adopted the portfolio strategies that have put IIM at the forefront of our profession. He is supported by an amazing team of back-office professionals that are equally trained and experienced with the IIM model. Between Laura and Carly, there are decades of client support experience that makes what they do “look easy” and believe me that is all attributable to their Super Hero genetics. Behind them, Jeannie is keeping the wheels well-oiled to make sure the train stays on the track. Did I say we are a family biz? Stephenie is now an important cog in the business management aspect of IIM, keeping the letter toons and all things advertising shining brightly. She has joined the IIM team working side-by-side with Jeannie to master the fee billing process and other accounting aspects of our business.
I have slowly accepted that my bleacher seats are where I can now reside, looking at less financial data and spending more time focusing on batting averages. My daily forty-five-minute drives (with my driver!) to the hospital, are now filled with blue skies, changing fall colors and seeing things I previously did not know even existed. I am also enjoying watching my two amazing grandkids grow into fully independent young and talented people. Kyla, now the owner of Grandpa’s Jeep, (being paid for with long hours of homework and life skills endeavors). She thanked me with a card concluding with: “The Jeep will get much love!” Equally impressive is my nine-year-old grandson that has adopted the ranch “mule”, now named BRP, as in burp. Keagan can park BRP in reverse in any small space without even a knock. And he is bound to be a sharpshooter at the range with his Red Ryder BB gun.
Lastly, my IIM family of long-time friends and clients with their out-pouring of well wishes, cards, and regular check-ins to keep me relevant in our business. My voice is now gone, so text messages and emails are the favored forms of communication. I am actively involved from the bleacher seats providing tactical suggestions and addressing both CPA and investment management issues that can receive value from my fifty-plus years of being in the trenches. Please continue reaching out to Laura first for help, as that is what I would do!
James and team will continue the Client updates and keep the IIM train on its uphill trending track. Did I mention that the quarterly reports for mine and Jeannie’s retirement portfolio report for September 30th reported double- digit returns (no fee for employee portfolio management)?
Rest assured: YOU ARE IN GOOD HANDS with the team and unique portfolio that is protecting and growing your money. So, you too can watch more baseball and less financial charts and reports .
THANK YOU ALL FOR YOUR SUPPORT! Be well and stop and smell the roses!
Securities Regulations Disclosures
The opinions communicated herein are for general information only and are not intended to provide any specific advice or recommendation. Please contact us directly to determine which investments may be appropriate for you in relation to your individual investment policy statement and needs.
As defined by the Private Securities Litigation Reform Act of 1995, information contained within this letter constitutes forward-looking statements (i.e. - expectations of future results). Past performance is not a guarantee of future returns. Investing involves risk and possible loss of principal. Although Intelligent Investment Management, LLP believes its expectations are based on reasonable assumptions, the actual results could differ materially from its expectations. Equity and Bond investments are not insured by the FDIC and involve risk of losing value. Factors which could cause actual results to differ from expectations include world crisis, changes in the stock markets in general, or changes in interest rates as well as other unforeseen events.
The reporting of our performance is intended to be in compliance with the rules of the Investment Advisers Act of 1940, as monitored by the SEC and State Regulatory Agencies. Accordingly, our performance results do reflect the effects of material market or economic conditions; dividends and other earnings are generally deposited into a cash reserve in each client’s model portfolio; we may compare our results to several broad market indices, however, our long-term broadly diversified strategy is not meant to track any one, or combination of indices (see below); each client’s account is managed to a predetermined and mutually agreed upon objective as documented in each client’s Investment Policy Statement; most equity investments are made in exchange traded closed end investment companies, REITs; total portfolio performance is shown after the deduction of advisory fees and brokerage commissions; Intelligent Investment Management employees, related party accounts and not for profit accounts pay either a reduced fee or no fee at all.
Portfolio Management Fees - Client managed portfolios are charged a managed-asset fee based on the total valuation of the managed accounts. Fees are NOT based on the performance of either the entire portfolio or any individual positions in the portfolio. The percentage fee is based on annual percentage rates, billed quarterly, in arrears, calculated on month-end total account valuations. The percentage fee is variable based on the size of the managed relationship; incremental percentage decreases as valuations exceed tiered thresholds. The fee schedule is included in each client management agreement and is included in the annual update of our Firm Brochure (Form ADV) that is distributed to all clients and given to all prospective clients at the first introduction to our Firm. Quarterly client portfolio reviews and monthly letters do refer to the performance of both individual positions and broad asset allocation categories. When referring to total portfolio performance, the performance returns are reported “net of fees”. There is not a meaningful way to allocate total portfolio fees to any one or group of positions.
Time Weighted Return (TWR) - Intelligent Investment Management, LLP uses TWR to report quarterly results to clients. This calculation method of performance reporting eliminates the impact of external cash flows such as deposits and withdrawals. This method provides an objective view of portfolio performance that is the industry standard for comparing investment strategies.
Broad Market Index - S&P 500 is an index of US large-cap stocks selected by Standard & Poor’s based on market size, liquidity and industry grouping among other factors.
HOW DO YOU DECIDE ON WHICH INVESTMENTS WILL BE INCLUDED IN EACH CLIENT’S INDIVIDUAL MANAGED PORTFOLIO?
Over the last twenty-five plus years, we have developed an investment strategy and philosophy for managing our clients’ nest eggs to meet their long-term investment goals; with investments that are time-proven, broadly diversified and provide reasonable total returns (both growth and current income). Our Active Management strategy includes regular reviews of the underlying fundamentals of each position, as it relates to the total portfolio that evolves with the economy and investment horizon. Over the years we have fine-tuned the portfolio by both adding and deleting positions that circumstances dictate; all with the goal of preserving principal and growing wealth at reasonable rates of return.
On a broad basis, our portfolio is divided between equity positions (for both growth and income) and income positions (primarily for predicable cash flows and maturities):
The total Equity Allocation is divided between Domestic Equities (including large, mid, and small cap funds) and Alternative Equities (currently focused on real estate, energy and commodities to meet the needs of a growing economy, including both funds and individual listed companies). Both allocations include positions in Regulated Investment Companies (RICs) that are managed by professional investment managers as Closed-End Funds (CEFs). In our opinion, CEFs offer advantages over other fund types (such as Open-End Mutual Funds and Exchange Traded Funds (ETFs).
The total Income Allocation is divided between a CD/Bond Ladder (with serially maturing individual securities paying fixed rates of interest) and Alternative Income positions in CEFs that are currently focused on the growing needs for power (e.g.- utility companies) and all types of infrastructure needed to support communities across the globe. The CEFs pay regular and significant dividends as well growth in value with a growing economy.
Each portfolio can also include allocations to cash set aside for specific needs and/or emergencies.
Depending on each client’s unique needs and goals, a total client portfolio is designed that includes all the above allocations, in amounts specific to each client.
Most clients currently have total allocations of between 60 to 65 percent equities and 35 to 40 percent income and cash allocations. Allocations typically are adjusted up or down depending on a combination of economic and geopolitical circumstances to provide both growth and downside protection. Our goal is for each client to pass the “sleep at night” test. Each client’s allocation is documented in Investment Policy Statement that is updated as circumstances dictate.