The 4-5-6 Markets

The replay of our January 28, 2025 conference call titled The 4-5-6 Markets can be found below.

Summary Points

• A “456 market” scenario over the next several years seems reasonable, with cash returning around 4%, bonds around 5%, and stocks averaging over 6% returns.
• Active management in bonds tends to outperform active management in stocks, challenging the notion that “there is no alternative” (TINA) to stocks for investment returns.
• Certain sectors have been resilient despite overall market downturns. The “Mag 7” tech giants continue to drive market performance.
• DeepSeek advancements could reduce the competitive moat of leading tech companies, potentially affecting their market valuations and the broader stock market.
• The traditional 60/40 stock/bond portfolio might evolve due to changing correlations between stock and bond returns, leading to a potential increase in the attractiveness of bonds and active management strategies in both bonds and stocks.
• The economy is growing at its potential with inflation expected to average around 3%. Concerns over a recession are misplaced.

Transcript