From beginning to end, the 2024 election cycle will be looked back on as historic. It was hard fought and contentious on both sides. But at the end of the day, polls and political pundits don’t decide elections—voters do.

“The wind is rising, and the air is wild with leaves. We have had our summer evenings; now for October eves!”
— Humbert Wolfe

“Sometimes the questions are complicated, and the answers are simple.”
— Dr. Seuss

“Do you believe in miracles? Yes!”

“Life moves pretty fast. If you don't stop and look around once in a while, you could miss it.”
— Ferris Bueller

Recently, inflation and interest rates have dominated the headlines. And for good reason—they are known market and economic risks. But as we look toward the second half of 2024, investors must also be prepared to navigate the geopolitical risks, whose twists and turns can often lead into uncharted territory.

As the fears about Y2K dissipated and the dot-com boom entered its last few months, the world’s equity investment opportunity set was split roughly 50 percent in the U.S. and 50 percent in the rest of the world. Fast-forward to today, and approximately 64 percent of global market capitalization is in the U.S. This shift has resulted from the U.S. equity market’s outperformance since the end of the great financial crisis more than a decade ago.

In our team meetings, we often discuss the shifting sands of the market. Not only is it an interesting topic, but it poses a challenge for asset allocators. We are in the midst of a multi-year outperformance cycle for large-cap growth. The companies that have driven this outperformance have all become household names: Alphabet, Amazon, Apple, Meta, Microsoft, Netflix, Nvidia, and Tesla. The top 10 names in the S&P 500 account for roughly 32 percent of the index compared to the average since 1990 of 20 percent. During the dot-com boom, the top 10 weightings peaked at 25 percent.

One of my core beliefs as a portfolio manager is that we get paid to worry so investors don’t have to. Several weeks ago, Brad wrote about what was worrying investors and whether those issues were worth worrying about. He also acknowledged that there are some real concerns out there as well. I want to build on that idea and provide insight into how portfolio managers think about risks when everything seems to be going exactly as investors had hoped and, except for some short pullbacks measured in hours or days, markets continue to move higher.

Most people know Yogi Berra as the Hall of Fame catcher and 10-time World Series champion with the New York Yankees. Many also know him as an unintentional philosopher, with famous quotations including “It’s like déjà vu all over again.” One Yogi saying I find myself thinking about frequently is this: “No one goes there anymore. It’s too crowded.” Here, Yogi was referring to a popular restaurant in Fort Lauderdale where the Yankees were having spring training. But it seems applicable to the conversations that we have daily.