The media often talks about volatility as if it were a design flaw in markets, an inconvenience to be engineered away. It is not. Volatility is the admission price to the long-term compounding machine that is the equity market. Savings accounts feel safe because their returns are contractually smoothed. The bank absorbs short-term fluctuations in exchange for paying you a very modest, predictable interest rate. Equities, by contrast, continuously change hands between buyers and sellers. Prices adjust not only to current earnings, but to expectations, uncertainty, liquidity, geopolitics, and human emotions. That visible fluctuation is uncomfortable, but it is precisely why the expected return is higher than a savings account. The equity risk premium exists because investors require compensation for bearing uncertainty and volatility. If stocks moved in a straight line like insured deposits, their returns would quickly compress toward those of cash. The premium survives because many cannot tolerate drawdowns, or the emotional strain of temporary loss. In other words, long-term investors are paid for providing liquidity and patience when others cannot. From a portfolio construction standpoint, volatility is not the same as risk; permanent loss of capital is risk. Volatility becomes destructive only when it forces poor decisions, like panic selling, using leverage (at the wrong time), or abandoning a disciplined process. Managed correctly, volatility is a feature that allows opportunistic buying and tax-efficient harvesting. The disciplined investor reframes downturns not as failures of the system, but as periodic repricing events that reset forward returns. Historically, the highest long-term returns have been earned by those willing to endure the deepest interim discomfort. Volatility is not the enemy of wealth creation. It is the toll you pay to build it. -Paul R. Rossi, CFA
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 Market declines can be uncomfortable, when headlines turn negative, fear starts to rise, and the media reinforces and amplifies the negative sentiment. Paradoxically, some of the most powerful wealth-building opportunities emerge precisely during these periods. The chart above illustrates this dynamic clearly. In late March and early April of 2025, markets experienced a sharp drawdown driven by tariff fears, with the S&P 500 falling nearly 20% from what was their recent highs. This period felt like the start of something bigger, but for savvy investors, it marked the beginning of a great opportunity. From the April 8th low, the market has rallied almost 40% in less than a year. That is not a typo, an outsized gain that far exceeded the broader index’s longer-term trend line of 8-10%. This rebound didn’t require perfect timing or speculative trading, it required understanding, conviction, and the willingness to act when sentiment was negative. This is what I refer to as The Market Triangle or The Triangle of Outsized Returns It starts with: 1. Fear (and the market dropping) 2. Market Recovery (the market bottoms and begins to bounce back) 3. New High (market continues upward making higher highs) When fear pushes prices well below trend, the risk-reward balance often shifts dramatically in favor of buyers. The green line in the chart represents the recovery path from the lows, while the black trend line reflects the market’s longer-term trajectory. Notice how the recovery didn’t just return prices to prior highs, it's exceeded it. Why does this happen? Because markets tend to overreact on the downside. Liquidity dries up, forced selling accelerates declines, and prices move faster than fundamentals. When uncertainty begins to clear—even modestly—capital flows back in, often aggressively. Investors who waited for “perfect clarity” frequently missed a substantial portion of the recovery. This doesn’t mean every decline should be bought blindly. Risk management, diversification, and valuation discipline always matter. But it does mean that downturns should be evaluated as potential entry points of opportunity, not just threats. Historically, many of the strongest multi-year returns began during periods when confidence was at its lowest. For long-term investors, the takeaway is straightforward: volatility is not the enemy—emotional decision-making is. Selling during fear often locks in losses, while selectively adding exposure during drawdowns can meaningfully enhance long-term returns. Markets will always fluctuate. What determines success is how you respond. Those who stay disciplined, focused on fundamentals, and willing to lean in when others pull back are often the ones who benefit most. As the chart demonstrates, temporary pain can set the stage for lasting gains. Remember when your geometry teacher swore the importance of understanding triangles? Turns out they were right, just not for finding x, but for spotting great investing opportunities. -Paul R. Rossi, CFA  We live in an age where data is no longer scarce; in fact, it’s overwhelming. We carry supercomputers in our pockets, can find out any fact or figure to even our most outlandish questions in seconds. Access to data has been thoroughly democratized. Yet, despite this flood of data, we suffer from understanding. With all the data available today, one could argue that investing hasn’t actually become easier, in fact, it might have gotten even harder. The reason is simple: data alone has little value without thoughtful interpretation. The real edge in investing today does not come from having more data than the next person. It comes from understanding what the data means, what it implies for the future, and, just as importantly, what can be ignored. Numbers tell a story, but they do not explain “why.” Revenue growth, margins, market share, and valuation metrics are only inputs. Insight comes from connecting those inputs to business models, competitive dynamics, and long-term industry trends. Consider how often investors confuse activity with intelligence. A stock price moves, headlines appear, and data points flood in by the minute. But reacting to raw data without context often leads to short-term thinking and poor decision-making. Investing success depends on filtering noise from signal, understanding which data matters and why. One of the most critical areas where interpretation matters is industry structure. An attractive company operating in a structurally unattractive industry often struggles to produce strong long-term returns. Two classic examples are the auto industry and the airline industry. Both are enormous, they are essential sectors with global demand, both generate staggering amounts of data, and yet for decades, both have produced poor to mediocre returns for investors. Why? Interpretation provides the answer. These industries are:
When many competitors fight for market share, margins are squeezed, profitability becomes cyclical, and returns on capital suffer. The data clearly shows thin margins and volatile earnings—but only interpretation explains why those numbers persist decade after decade. Contrast that with industries that have:
Companies with these dynamics can generate superior growth rates, maintain pricing power, and earn superior returns. The data may look similar on the surface—revenues, earnings, cash flow—but the meaning is entirely different once competitive dynamics are understood. This is where the greatest value lies for investors: not in spreadsheets, but in judgment. Understanding how a company makes money, who its competitors are, how easily customers can leave, and how the industry may evolve over the next several years matters far more than the recent financial reports. In a world where data is everywhere, wisdom is the true scarcity. Successful investing is not about knowing more numbers; it’s about knowing which numbers matter, what they are telling you, and how they may shape the future. Data is everywhere; insight is rare. -Paul R. Rossi, CFA  Investors and the media love stocks until they don’t. The image above plots the one-month daily price-change volatility of Apple (AAPL), NVIDIA (NVDA), Amazon (AMZN), and Berkshire Hathaway (BRK.A) over the last 10-years. The monthly values gyrate in different directions and at different magnitudes, but they all share a common theme: Even the world’s strongest companies look like they’re riding a mechanical bull when viewed through the lens of short-term (1-month) price movements. And yet… these are some of the best-performing companies of the last decade. Their returns prove it:
This disconnect highlights one of the most underappreciated truths in investing: Price volatility is not the same thing as business volatility. The former is noisy, emotional, and sometimes irrational. The latter is grounded in revenue, earnings, cash flow, and competitive durability, metrics that matter far more than a stock’s mood swings. Apple Look at Apple’s chart and you’d think the company was frequently in crisis. Daily and monthly price swings can be significant. Yet beneath that noise sits a company with some of the strongest financial foundations in corporate history. Apple continues to deliver consistent revenue growth driven by services, wearables, and an installed base that behaves more like a subscription ecosystem than a hardware business. EPS growth remains robust thanks to disciplined buybacks and enviable margins. It’s balance sheet? Let’s just say Apple could buy several Fortune 500 companies with the cash it has lying around. NVIDIA NVIDIA’s chart looks like it drank five energy drinks before opening bell—big spikes, big dips, and lots of drama. But that’s what happens when a company grows revenue at triple-digit rates and becomes the backbone of the AI revolution. Earnings per share have exploded, margins have expanded, and the company sits on a balance sheet fortified by cash flow that would make most CFOs teary-eyed. Short-term price swings simply reflect the market’s inability to keep up with the scale of NVIDIA’s growth story. Amazon Amazon’s stock also moves more than most investors would prefer, but the business itself continues to strengthen. AWS leads global cloud infrastructure, advertising revenue is growing faster than many pure-play ad platforms, and retail continues to become more efficient. Long-term revenue growth has averaged in the double digits for years, and EPS expansion is accelerating as high-margin segments mature. I’m pretty confident people don’t miss looking for a parking spot at their local mall, standing in long lines, and driving around all day trying to find the store that has what they are looking for. Berkshire Hathaway - Even Buffett Isn’t Immune Finally, Berkshire Hathaway, Warren Buffett’s fortress of a conglomerate shows noticeable volatility as well. And if the Oracle of Omaha can’t avoid market moodiness, why should anyone expect their own portfolio to? Berkshire’s balance sheet is one of the strongest in the world, cash levels remain towering, and operating earnings continue their long-term climb. Buffett’s own philosophy is the perfect summary: “In the short run, the market is a voting machine; in the long run, it’s a weighing machine.” The Bottom Line Market volatility may make headlines, but business fundamentals build wealth. All four companies—Apple, NVIDIA, Amazon, and Berkshire, demonstrate that even elite performers endure temporary turbulence. A smart investor treats volatility like background noise. -Paul R. Rossi, CFA  Wayne Gretzky famously said, “I skate to where the puck is going to be, not where it has been.” In many ways, that single line captures the core philosophy of successful long-term investing. As investors, our job is not simply to analyze today’s financial situation - which reflect the past - but to understand where industries, technologies, and consumer behavior are moving. Capital grows not by chasing yesterday’s winners but by positioning portfolios for tomorrow’s opportunities. A classic counterexample is the buggy whip industry. In the late 1800s, investing in companies that manufactured buggy whips or carriage accessories might have seemed prudent. The horse-drawn economy was stable and well-established to say the least, (horses and other 4-legged animals have been used for thousands of years for travel and work-related activities). But when combustion engine and the automobile emerged, it wasn’t just a new product, it was a new system that rendered entire supply chains obsolete. No matter how efficient or profitable a buggy-whip manufacturer was, innovation changed the economic landscape. Investors who “skated to where the puck was” didn’t do well. Those who saw where the puck was going—toward internal combustion engines, assembly-line manufacturing, and mass mobility, capitalized on an enormous opportunity. This same pattern repeats throughout history. Prior to the rise of the automobile, the railroads were once the “tech sector” of their time—a transformative industry attracting capital, engineering talent, and speculation. Today, while still important, railroads are mature, predictable businesses with limited growth, in other words, the innovation frontier moved on long ago. Telegraph companies gave way to telephones; telephones gave way to mobile devices; mobile devices and smart phones opened the door to cloud computing, artificial intelligence, and advanced semiconductor ecosystems. Financial statements capture the current state of a company, but strategic positioning determines its trajectory. A balance sheet won’t show you whether a firm is innovating, adapting to new technologies, or expanding into emerging markets. Financial statements are a lagging indicator of past economic activity but tell nothing about the future. For example, a retailer heavily investing in e-commerce logistics may look less profitable today because of capital expenditures but may be positioning itself for a decade of digital-first consumer behavior. Conversely, a company with attractive current cash flow but declining market relevance may appear healthy right up until demand falls off a cliff. Understanding these nuances are critical. Consider Kodak and Blockbuster, at one point they were both leaders in their industries that failed to adapt. Believe it or not, Kodak actually invented the digital camera but resisted cannibalizing its profitable film business. Innovation happened but leadership ignored it, and the rest is history. Blockbuster assumed DVDs and physical rentals would remain dominant; meanwhile, Netflix skated toward streaming long before the technology was mainstream. These companies didn’t just make business errors—they rigidly followed the puck even after it had moved. Today, investors face similar crossroads. Artificial intelligence, clean energy infrastructure, robotics, modern defense, and cybersecurity represent sectors where innovation is expanding rather than contracting. Companies that are adaptable, technology-forward, and data-driven are not only more resilient but better positioned for long-term compounding. Investing is ultimately about allocating capital toward the future, not the past. Growth follows innovation, and innovation follows technological change. As an advisor, my mission is to ensure portfolios are aligned with that direction, skating not to where the puck currently is, but to where it is going. -Paul R. Rossi, CFA  You're doing everything you should be doing, or so you think. You've been pouring savings into traditional IRAs and 401k's, lured by tax-deferred growth. It's a solid strategy—contribute pre-tax dollars, watch your investments compound without Uncle Sam skimming off the top each year. But here's the twist: What if I told you that for certain investors, a plain-vanilla taxable brokerage account could deliver *better* after-tax returns, especially if you're holding high-growth assets? Let's learn why this might be your secret weapon for tax-smart wealth building, and how it supercharges your legacy for your heirs. First, the basics: In a traditional IRA or 401(k), withdrawals in retirement are taxed as ordinary income (vs. long-term capital gains rates), hitting rates as high as 37%. That's right, retirement accounts get clobbered at potentially sky-high marginal rates when you start drawing down. Contrast that with a taxable brokerage account: You fund it with after-tax dollars, but long-term capital gains on assets held over a year are taxed at just 0%, 15%, or 20%—far gentler than ordinary income. Plus, if your investments are growth-oriented stocks or funds that rarely spit out dividends (think tech giants like pre-dividend Amazon), you pay zilch on unrealized appreciation. The account balloons tax-free until you sell, at which point only the gain—not the principal—is taxed at those preferential rates. In addition, no forced distributions via Required Minimum Distributions (RMDs) starting at age 73 with IRAs and 401k's. You control the timing of sales, harvesting gains in low-income years. And it gets even better...at least for your heirs. Brokerage accounts offer a "step-up in basis" at death: Assets reset to their fair market value on the date you pass, erasing all pre-death gains for tax purposes. If your heirs sell immediately after your passing? Zero capital gains tax. Hold and grow? Only future appreciation is taxed at LTCG rates. Traditional IRAs and 401k's, no such luck, your heirs inherit the full tax-deferred bomb, with distributions taxed as ordinary income AND post-SECURE Act, non-spouse beneficiaries must empty the account within 10 years, triggering a decade of taxable withdrawals that could spike their brackets. Brokerage accounts have no 10-year clock. Heirs can hold indefinitely, letting tax-efficient compounding continue for generations. Scenario: Meet Sabrina, a 67-year-old retiree with $4 million split evenly between a traditional IRA and a taxable brokerage. Both are invested in a high-growth investments with minimal dividends (say, 0.5% annually). Over 20 years, both portfolios grew to $2 million. Sabrina needs $100,000 yearly in withdrawals. From the IRA: That $100,000 is considered ordinary income for tax purposes. Assuming she's in the 22% bracket (taxable income around $130,000 including Social Security), she forks over $22,000 in federal taxes. After 10 years, she's withdrawn $1,000,000 and paid about $220,000 in taxes, leaving her portfolio lighter by that drag. Fast-forward: Sabrina passes at 77, with $1,000,000 left. Her kids must drain the account within 10 years, paying taxes at their tax rate on every dollar taken out. If they sold all of it immediately, they'd pay a 37% marginal tax rate on the $1,000,000 withdrawn. Flip to the Brokerage account: She sells $100,000 worth of shares annually. Her original cost basis is $1,000,000, so each sale triggers roughly $50,000 in gains (proportional growth). At a 15% long-term tax rate, that's just $7,500 in taxes per withdrawal. Over 10 years? $75,000 in taxes, saving her nearly $145,000 compared to the IRA. And no RMD's means she can let the account compound longer if she'd like. Upon her death, the remaining $1,000,000 gets a step-up: Kids inherit at current value, meaning if they sell immediately, they will pay $0 taxes, keeping all $1,000,000. Result: hundreds of thousands of dollars saved. Of course, this isn't a one-size-fits-all. For those with growth-heavy portfolios and flexible withdrawal needs, the taxable brokerage account can provide lower tax rates, increased distribution control, and heir-friendly features that can supercharge your legacy. It's not just about asset allocation; it's also about asset location. -Paul R. Rossi, CFA  The United States Federal Reserve employs more PhD's economists than any other institution; north of 400 at any one time. The allure of predicting the future keeps us glued to what the Fed says and their view on the economy. Yet if history is any guide, we should ignore their predictions to just about everything they predict. Why do I say that? Because an army of 400+ economists advising the Federal Reserve Governors doesn't seem to help in predicting where the economy is going. Take a look at some comments and predictions from 3 different Federal Reserve Chairmen over the last several years. February 2024: Jerome Powell admitted in an interview that the Fed had missed risk signals leading to the Silicon Valley Bank collapse. What ended up happening: SVB failed in March 2023 due to unrealized losses on bonds amid rising rates, triggering a banking crisis and requiring federal intervention. May 2022: Jerome Powell stated that a 75 basis-point interest rate hike was "not something the committee is actively considering." What ended up happening: Shortly after his renomination, the Fed implemented four consecutive 75 basis-point hikes starting in June 2022, leading to market volatility and the worst bond market performance in over a century. June 2021: Jerome Powell testified before Congress that inflation pressures were "transitory" and expected to fade as supply bottlenecks eased. Jerome Powell downplayed rising inflation as temporary, delaying rate hikes. What ended up happening: Inflation persisted and accelerated, peaking at 9.1% in June 2022, requiring aggressive rate hikes that contributed to economic strain and bank failures. The Fed's slow response allowed inflation to become entrenched, necessitating steeper hikes later and prolonging economic pain. March 2021: Jerome Powell indicated that interest rates would remain near zero for an extended period to support recovery. What ended up happening: Rapid rate hikes beginning in 2022 devalued low-rate securities, contributing to the collapse of banks like Silicon Valley Bank in March 2023. September 2018: Jerome Powell raised interest rates preemptively, citing concerns that strong economic growth under Trump would spark inflation. What ended up happening: No significant inflation materialized from growth or tariffs; instead, the hikes caused a cash shortage in financial markets, necessitating a $500 billion bailout in fall 2019. October 2008: Alan Greenspan admitted to Congress a "flaw" in his ideology that self-interest would protect markets without heavy regulation. What ended up happening: The 2008 financial crisis unfolded as a "once-in-a-century credit tsunami," exposing deregulation's role in enabling risky behaviors that led to global recession. April 2008: The Fed under Ben Bernanke forecasted the unemployment rate for Q4 2009 with a narrow confidence interval. What ended up happening: Actual unemployment rose 4.4 percentage points higher than forecasted, equivalent to over 6 million more unemployed. April 2008: The Fed under Ben Bernanke assessed low probability (less than 15%) of a deep recession. What ended up happening: The Great Recession occurred with GDP declines comparable to depressions, far exceeding assessed risks. October 2007: The Fed under Ben Bernanke forecasted 2.6% GDP growth for 2008. What ended up happening: Actual GDP growth was -3.3%, a 5.9 percentage point error, as the recession deepened unexpectedly. May 17, 2007: Ben Bernanke said troubles in the subprime sector were unlikely to seriously spill over to the broader economy. What ended up happening: Subprime issues triggered the 2008 financial crisis and Great Recession, with GDP contracting sharply. 2002-2005: Alan Greenspan maintained that low interest rates did not contribute to a housing bubble, as long-term rates were influenced globally. What ended up happening: Low rates fueled speculative housing investments, which helped lead to the 2007-2008 subprime crisis and Great Recession. Never forget, the income of the Federal Reserve Chairman, the Board of Governors, and the staff at the Federal Reserve are not affected by how well they predict the future. Planning is what matters, predictions don't. -Paul R. Rossi, CFA  Financial freedom and generational wealth is accomplished by owning assets that appreciate over time. Real estate, business ownership, and investable public market equities are all assets with the capacity to grow in value; providing the opportunity for long-term wealth creation. Real estate (both residential and commercial), for instance, overtime often increases in value, especially in desirable locations. A well-chosen property can yield rental income while at the same time its market value can rise. Business ownership is another way to build wealth. Entrepreneurs who create or acquire private businesses can see substantial growth if their businesses scale. Similarly, investing in public companies is another powerful way to build wealth, and I believe has many advantages over real estate and running a business. Want to take advantage of the AI revolution, Crypto, or the next hyper growth opportunity? The stock market offers that, it allows virtually anyone to own a piece of high growth companies. Some advantages of stock market investing:
The 3 keys are:
The stock market offers the ability to invest in some of the fastest growing cutting edge companies that are run by many of the smartest people in world. Quality assets require time to grow, as Warren Buffett has said, “the stock market is a device for transferring money from the impatient to the patient.” -Paul R. Rossi, CFA  As a financial advisor, I often recommend strategies that align everyday spending with long-term wealth creation. The Schwab Investor Card® from American Express is a compelling option for investors looking to enhance their portfolios effortlessly. This no-annual-fee credit card offers 1.5% cash back on all eligible purchases, automatically deposited into an eligible Schwab account, such as a Schwab brokerage account. But don't let 1.5% fool you, over time, the invested money in your account can grow substantially, equating to much more than 1.5%. This unique feature makes it an attractive choice for clients who maintain accounts with Charles Schwab and wish to bolster their investments through routine spending. The 1.5% cash back rate is straightforward and competitive (although not the absolute highest in the market compared to cards offering 2% or more). However, its true value lies in its seamless integration with Schwab’s investment platform. Unlike traditional cash back cards that provide statement credits or redeemable rewards, the Schwab Investor Card deposits earnings directly into your brokerage account, where they can be invested in stocks, ETFs, mutual funds, or virtually any other asset on available at Schwab. This direct deposit mechanism transforms everyday purchases, like groceries, utilities, dining, travel, and business expenses, into substantial opportunities for wealth accumulation. The power of this card becomes evident when you consider the impact of growth over time. For example, if you spend $60,000 annually using the Schwab AMEX card (instead of your debit card), it will generate $900 in cash back (1.5% of $60,000). Invest the $900 in a portfolio with an average annual return of 10% and the results are striking, after 20 years, assuming consistent spending and reinvestment, that annual $900 contribution could grow to over $55,000. Over 30 years, this same scenario would equate to over $160,000. These figures highlight how small, consistent contributions, when invested, can significantly enhance long-term wealth without changing spending amounts, but by simply changing which card is swiped at checkout. Win/Win By intelligently using the Schwab AMEX card instead of your bank debit card, you have the opportunity to substantially increase your wealth. Important: It's critical to understand the balance should be paid off every month, so no interest charges are incurred. Only spend what you can comfortably pay-off every month. Additionally, the card offers a $200 statement credit after spending $1,000 in the first three months, providing an immediate boost to your investment account. For Schwab clients, this card can be a strategic tool to align spending with investment goals, leveraging time and market growth to amplify wealth. -Paul R. Rossi, CFA P.S. I use the Schwab American Express Card myself.  The CBOE Volatility Index (VIX), often called the "fear gauge," measures the market’s expectation of 30-day volatility based on S&P 500 index options (red chart above). The US Investor Sentiment % Bull-Bear Spread, derived from the AAII Sentiment Survey, reflects the difference between investors expecting stock prices to rise (bullish) versus fall (bearish) over the next six months (purple chart above). Using both the VIX and Bull-Bear Spread to Enhance Stock Market Returns By combining these indicators, investors can identify periods of high fear and pessimism, which historically signal opportunities for strong forward returns over the following 1, 3, and 5 years. Analyzing data from the past 25 years reveals how these metrics can guide investment decisions. The VIX spikes during market turmoil, often exceeding 30, indicates heightened volatility and fear. Notable peaks include October 2008 (96.40 during the financial crisis) and March 2020 (82.69 during the COVID-19 crash). Conversely, a negative Bull-Bear Spread, where bearish sentiment outweighs bullish, signals widespread pessimism. Extreme negative spreads, such as -41.2% in February 2025 or similar lows in 2009 and 2020, often coincide with market bottoms. Historical data shows that when the VIX is high (above 30) and the Bull-Bear Spread is significantly negative (below -20%), the S&P 500 tends to deliver above-average returns.* Below are nine examples from 2000–2025, illustrating this pattern:
These periods reflect contrarian opportunities: extreme fear (high VIX) and pessimism (negative spread) often mark capitulation, where selling exhausts itself, setting the stage for big recoveries. Investors can use these signals to "buy when others are fearful," as Warren Buffett has said many times. However, timing is important, waiting for both indicators to align reduces false signals. For example, a high VIX alone in mid-2008 preceded further declines but combining it with a negative Bull-Bear Spread in early 2009 pinpointed the bottom. By leveraging these indicators, investors can capitalize on fear-driven opportunities for superior returns. -Paul R. Rossi, CFA *Returns are rounded 
Exponential growth can transform modest amounts into substantial wealth over time. What's interesting is that 20% returns don't just grow to be twice as large as 10% returns, due to the exponential nature of compounding. Let’s compare these returns over 10, 20, and 30 years to explore this phenomenon. 10% Annual Compound Returns
20% Annual Compound Returns
Comparing The Returns To understand the growing disparity, let’s calculate the ratio of the 20% return to the 10% return at each interval:
Compounding is Exponential Each year’s interest builds on the prior year’s total, magnifying the impact of the higher rate. The longer the period, the more pronounced the difference. A 20% compound return vastly outstrips a 10% return over time. After 30 years, a $10,000 investment at 20% grows to over $2.37 million, while at 10%, it reaches $174,494. This demonstrates the extraordinary power of higher compound returns for long-term wealth creation. -Paul R. Rossi, CFA 
As of April 2025, U.S. inflation, measured by the U.S. inflation rate, stands at 2.3%, while core inflation, excluding volatile food and energy prices, is at 2.8%. These figures align closely with the 25-year historical average for headline inflation (2.4%) and core inflation (approximately 2.3%), signaling a return to pre-pandemic stability after peaking at 9.1% in 2022. This convergence reflects effective Federal Reserve policies and easing supply chain pressures, with inflation now hovering near the Fed’s 2% target. For Consumers: This stabilization means improved purchasing power compared to recent years. Prices are rising more slowly, particularly for essentials like groceries (up 2.8% annually) and energy (down 3.2% year-over-year). Real average hourly earnings, up 1.4% from last year, provide some relief, allowing modest gains in living standards. For Businesses: Benefit from predictable pricing environments, enabling better planning for investments and wages. Lower inflation reduces pressure to pass on rapid cost increases, though sectors like housing and insurance (up 11.1% annually) face persistent challenges. For Markets: Viewed as a positive. The tame inflation data supports stable business conditions and potentially only modest adjustments will be needed by the Federal Reserve, all of which are a positive for both the stock and bond markets. Markets like stability as much as possible. Sometimes average is good, and right now, core inflation is at its 25-year long-term average. -Paul R. Rossi, CFA  The investment industry often champions international diversification, touting lower valuations and uncorrelated returns as key benefits. However, this perspective overlooks the unique strengths of the U.S. market, driven by a culture of innovation, world-class education, disruptive entrepreneurship, and dynamic immigration. These factors fuel unparalleled growth, making U.S. investments more compelling than international alternatives, despite the industry’s push for more international exposure. Want proof? Take a look at the returns of the US stock market vs. international markets.  The discrepancy of returns between the United States and international markets is also proven when using different time frames. The bottom line, international returns have been subpar when compared to the United States over many time periods and economic conditions.  The U.S. thrives on a culture of experimentation and innovation unmatched globally. Silicon Valley and many areas around the country are a crucible for groundbreaking technologies, from software, computer chips, AI to biotech. Companies like Amazon, Tesla, and Nvidia consistently redefine industries, delivering exponential growth that overshadows the incremental gains of many international markets. This disruptive spirit is absent in many regions where bureaucratic inertia or risk-averse cultures stifle progress. Many big investment firms argue that international markets offer “value” due to lower price-to-earnings ratios, but value without growth is a hollow promise, and the proof is in the historical returns. A cheap stock with low-to-stagnant growth will rarely outperform a fast-growing dynamic U.S. company trading at a premium. America’s universities produce cutting-edge research and a steady stream of talent. These institutions foster entrepreneurs who launch unicorns, not just workers who maintain the status quo. In contrast, many international education systems prioritize rote learning over creativity, limiting their ability to generate transformative businesses. The U.S. also benefits from immigration, attracting ambitious minds from around the globe. Immigrants like Elon Musk and Satya Nadella have reshaped industries, contributing to a virtuous cycle of innovation and growth that most countries can’t replicate. The industry’s claim that international markets reduce portfolio risk through low correlations is outdated thinking. Globalization and interconnected financial systems mean that markets now move in tandem more than ever, especially during crises, correlations between U.S. and international markets often approach 1.0, negating diversification benefits. Meanwhile, U.S. growth stocks, particularly in tech, have consistently outperformed international indices over decades. Over the last 20 years the S&P 500 has gained over 600%, while many international markets have lagged significantly. From time-to-time international investing may offer tactical opportunities, but the U.S. has significant structural advantages—innovation, education, disruption, and immigration—which makes it the engine of long-term wealth creation. Betting against America’s growth is a mistake the investment industry continues to make, so ignore what many so-called “experts” tout about the strength of international investing. -Paul R. Rossi, CFA  If you hadn’t checked the markets since January, you’d have avoided the anxiety many investors and headline readers experienced—because despite some startling volatility, the stock market has now completed a full round trip. The market is now positive territory for the year. Over the last few months, the headlines screamed of an impending recession and trade wars, yet GDP growth is steady, and unemployment remains at 4.2%. The market’s swings were amplified by sensationalism, with every dip framed as a catastrophe. Successful investors who tuned out this noise avoided the emotional toll. As Warren Buffett famously said, “The stock market is a device for transferring money from the impatient to the patient.” The market officially returned to positive territory for 2025 as of May 13, posting a positive total return year-to-date. This measured comeback followed a rollercoaster ride: early-year optimism gave way to a drastic slide due to heightened US-China trade tensions, with the index plunging as much as -19% on April 21st. For fundamentally focused investors, this year so far is a powerful reminder: if you managed to block out short-term market noise, you missed the emotional rollercoaster but kept the ride’s benefits. Neither the sharp drops nor the breathless rebounds matter nearly as much as sticking with well-chosen investments over time. Market headlines and pundit predictions will always generate anxiety AND many times will be wrong. Some of the largest tech companies Amazon, Nvidia, Meta, Microsoft, Nvidia, and Tesla—have been central to this narrative. Despite large declines beginning in late February and continuing through mid-April and the subsequent recovery, highlight significant opportunities for investors who were comfortable to capitalize on the over sensationalized economic conditions. Here’s a look at 5 large technology companies and their performance from their April 2025 lows to May 14:
What about companies outside of technology?
Technologies dominance and many other well-known and well-run companies have already produced incredible returns for investors who were willing to stay sane amid media hysteria. What does this mean? It means focusing on fundamentals—earnings growth, cash flow, and innovation—rather than reacting to daily swings and what the media says. For savvy investors, 2025’s volatility was an opportunity to buy amazing companies and capitalize on their rebound. -Paul R. Rossi, CFA 
At the annual shareholder meeting in Omaha, Nebraska over the weekend, Warren Buffett, the legendary investor known as the "Oracle of Omaha," announced his retirement as CEO of Berkshire Hathaway at the end of the year, marking the end of a 60-year era. This transition caps a truly remarkable career that transformed Berkshire from a struggling textile mill into a $1.1 trillion conglomerate, cementing Buffett’s legacy as the greatest investor in history. Buffett took control of Berkshire Hathaway in 1965, under his leadership, the company’s per-share value compounded at an astonishing 19.9% annually, absolutely dwarfing the overall market, his performance translated into a staggering 5,502,284% return for shareholders, meaning a $10,000 investment in 1965 would be worth over $500 million today. Buffett’s strategy, rooted in value investing principles learned from Benjamin Graham, emphasized buying outstanding businesses at reasonable prices and holding them for the long-term. His portfolio grew to include iconic investments like Apple, Coca-Cola, and American Express, alongside wholly owned subsidiaries such as Geico, See’s Candies, and Burlington Northern Santa Fe. Beyond investments and his much-anticipated annual shareholder letters, he has provided worldly wisdom to many. His ability to navigate economic cycles, from recessions to market booms, earned him global reverence. As usual, there were many quotable moments at the shareholder meeting, below are a few which I think are especially timely.
These quotes capture Buffett’s timeless wisdom on investing, emphasizing the critical role of temperament, patience, and disciplined decision-making, while also highlighting his confidence in America. During times of heighted uncertainty, like we are experiencing now, it can be comforting to hear from the most successful investor of all time. -Paul R. Rossi, CFA  Who wouldn't want a working crystal ball or know what the news headlines are going to be, a day or two in advance? "When a Crystal Ball Isn't Enough to Make You Rich" (click to read original study) a research paper by Victor Haghani and James White challenges the belief that knowing the future would guarantee investment success. The short answer: It Doesn't The "Crystal Ball Challenge," an in-person November 2023 experiment involving 118 finance-trained young adults (current MBA or Masters of Finance students), the rules stated, "The object is to see how well you can do trading stocks and bonds if you know the news from the front page of the WSJ one day in advance. In other words, you’ll be in that dreamed-of position of being a trader who “knows the future.” For example, you will be shown the front page of the WSJ for a Wednesday and be able to take a long (or short position) in the stock market and in the bond market at prices prevailing at Monday’s close (that is, two days earlier)." The Results Were Sobering
The study demonstrated that even with advance knowledge of the Wall Street Journal’s front page, participants didn't perform well. This underscores that predictive information alone is insufficient without accurate market interpretation and disciplined trading. The paper reveals the difficulty in short-term trading and essentially having a crystal ball is no guarantee of success. The counter to trying to predict the future is, first realizing it's impossible, and even if it was possible, it probably wouldn't help much. To Be Successful, Investors Must Prioritize
-Paul R. Rossi, CFA  Explanation
These historical events highlight the nature of markets with significant downturns followed by robust recoveries. What's the adage in reverse, 'what goes down, must come up.' -Paul R. Rossi, CFA  Are you a glass half-full or half-empty type of person? Why? Because it might have some impact on how you view the markets. What's ironic, either way, it doesn't matter what type of person you are, because the stock market will continue its march higher regardless of:
We know the media will always focus on the orange periods; while successful investors understand that the orange periods of time are just setting up for future blue periods. Pessimists and sellers beware. -Paul R. Rossi, CFA The Power of Market Corrections to Supercharge Returns Market corrections and bear markets—sharp declines of 10% and 20% or more respectively —can feel like a punch to the gut with lingering pain, however it can also set the stage for extraordinary returns. When a stock drops significantly, the math of recovery amplifies gains: a 50% decline works out to be a 100% rebound when the price returns to its previous level. This dynamic can supercharge returns for those who buy when the market is going through one of its manic phases...turning fear into opportunity. For example: Facebook (META), in 2022, its stock plummeted nearly 70% from its high of $384 to a low of around $88, battered by ad revenue woes and metaverse skepticism. By April 2025, META had rebounded to $582, turning a $10,000 investment at the bottom would’ve grown to over $66,000—far outpacing a buy-and-hold from the peak. Amazon (AMZN) offers another case. During the 2008 financial crisis, it fell 65% from $100 to $35. By 2010, it climbed back to $135, a 286% gain from the trough. A $10,000 stake at the low would’ve ballooned to $38,600 in two years, showcasing how the market corrections can turbocharge returns. The power lies in percentages, not points. A stock going from $120 to $60 is a 50% decline; however, from the bottom it's a 100% gain on the way back up! This asymmetry rewards those who seize the moment. Supercharged Returns Drop of 10% equates to a 11.11% gain. Drop of 25% equates to a 25.00% gain. Drop of 30% equates to a 42.86% gain. Drop of 40% equates to a 66.67% gain. Drop of 50% equates to a 100% gain. Drop of 60% equates to a 150% gain. Drop of 70% equates to a 233% gain. Drop of 80% equates to a 400% gain. Corrections are inevitable—think dot-com busts, panic selloffs, trade wars, etc., but history shows companies like Meta and Amazon often emerge stronger, turning steep declines into launchpads for outsized gains. It isn’t easy when fear is everywhere you look, but the math is undeniable. -Paul R. Rossi, CFA Today’s big stock market drop might feel alarming, but it’s a normal part of the equity landscape, in other words, it’s business as usual. Volatility—those sharp ups and downs in stock prices—is not a glitch; it’s part of the system and should be expected. It’s the price investors pay for the far superior long-term returns that stocks deliver compared to cash and bonds. History shows that while cash and bonds can offer stability, they dramatically lag behind equities in wealth creation over time, precisely because they avoid some of the volatility that stocks endure. Consider just 3 examples (although there are many more):
Why do stocks outperform? They’re tied to companies that innovate, grow, and adapt—unlike bonds, which lock in fixed payments, or cash, which erodes with inflation. I’ll admit that cash and bonds have a place in a lot of investors’ portfolios, keep in mind, growth will come from owning stocks. Today’s drop, however jarring, is just noise in that long-term signal. Volatility isn’t a bug to fear—it’s the engine that drives equity investors to greater heights. History proves it, when investors own good companies, the payoffs are massive for those who can ride out the short-term swings. -Paul R. Rossi, CFA If an investor can remember one thing, it's this: Revenue GROWTH is the cornerstone of a company’s ability to drive stock growth over time. Period. Full stop. It’s the top-line figure on an income statement—the starting point that dictates how much a business can ultimately trickle down to earnings per share (EPS), i.e., "the bottom line," that investors should understand and fixate on. Without strong revenue growth, achieving EPS growth becomes a steep uphill battle. Relying on cost-cutting, one-off gains, share buy-backs, and other forms of financial engineering rather than top line business growth is a recipe for mediocre to poor performance. A company’s ability to grow its top line signals demand, market strength, and scalability—key drivers that will ultimately propel stock prices upward. Amazon exemplifies this dynamic; Amazon’s revenue story is a masterclass in growth translating to stock success, while so many other legacy giants like Ford, IBM, Intel, and Johnson & Johnson (just to name a few) illustrate the pitfalls of revenue stagnation. Over the last 10 years, Amazon’s revenue skyrocketed from a little over $100 billion to over $600 billion, a compound annual growth rate (CAGR) of nearly 20%. This surge, propelled by e-commerce dominance and AWS’s rise which has translated into a stock return of over 1,000%, with shares climbing from roughly $18 (split-adjusted) to $190+. Amazon’s relentless top-line expansion, paired with margin improvements, has kept investors enthusiastic, even as its forward P/E sits at just over 30, signaling confidence in future growth. Let's compare some other well-known companies to Amazon:
 
What does this tell us? Amazon’s decade of powerful revenue growth underscores how top-line strength drives EPS and stock gains. Ford, IBM, Intel, and Johnson & Johnson, with flat or declining revenues, struggled to deliver adequate market returns. If you don't have strong revenue growth, it's extremely difficult to have strong stock growth. What's the takeaway? It all starts with the top line: Revenue growth is the engine that powers stock success. -Paul R. Rossi, CFA  Mark Twain famously wrote, "A man who carries a cat by the tail learns something he can learn in no other way." Some lessons, particularly the painful ones, only come through direct often uncomfortable experience...in today's environment, it could be like trying to make sense of the current economic landscape. If it makes you feel any better, economists struggle to understand too. Below are six quotes to keep in mind the next time you hear an economic forecast. "The only function of economic forecasting is to make astrology look respectable." - John Kenneth Galbraith "Economics is extremely useful as a form of employment for economists." - John Kenneth Galbraith An economist is someone who sees something working in practice and wonders if it will work in theory." - Ronald Reagan "Economists have predicted nine out of the last five recessions." - Paul Samuelson "If all the economists in the world were laid end to end, they still wouldn’t reach a conclusion." - George Bernard Shaw "An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today." - Laurence Peter - Paul R. Rossi, CFA  It's hard to admit sometimes...but it's us. We can be our own worst enemy. Sabotaging ourselves. It's not what the price of Amazon, JPMorgan, or Costco stock are doing on any particular day, week, or month that will impact your investment success. It's what you will do or do not do that will determine your success. Case in point, Amazon, my most accounts is one of the most successful businesses in the world, literally changing the way consumers shop.
How do lose money in a stock that turns $10,000 into $20,300,000? Panic selling is how. It's what you will do or not do that will determine if you are successful or not. Stare fear right in the face and sternly proclaim, "Not today, you will not scare me today." -Paul R. Rossi, CFA  The phrase "Myopic Thinking is the Biggest Killer of Success" captures a profound truth: an obsession with short-term gains, immediate gratification, or fear of the near-term often blinds us from the much bigger picture. Myopia, in this sense, isn’t just a visual limitation but a physical one, a failure to see beyond the present moment causing action that is self-defeating. Success, whether in your career, your health, or your personal finances demands patience, foresight, and a willingness to endure temporary challenges for greater rewards. Let’s explore this idea through three examples: the journey to becoming a doctor, the pursuit of long-term health, and the volatility of investing. Consider the path to becoming a doctor. Aspiring physicians face a grueling decade or more of education—challenging undergraduate studies, medical school, residency— all before the hard work begins to pay off. The short-term costs are steep: years of student debt, countless examinations, sleepless nights, and delayed financial independence. A myopic thinker might balk at this, opting instead for a quicker, less demanding career path with immediate payoffs. Yet, those who endure the long haul emerge with not only a lucrative profession but also the fulfillment of helping people and mastering a complex craft. The myopic choice sacrifices a lifetime of impact for fleeting comfort, proving that success hinges on seeing beyond the present struggle. Myopic thinking can often sabotage our well-being. Weight loss and fitness require sacrificing short-term pleasures, like eating less and skipping desserts while at the same time enduring consistent workouts. A myopic mindset might prioritize the instant joy of a late-night snack over the goal of a healthier body. In contrast, those who embrace delayed gratification find themselves shedding pounds, boosted energy, and reduced disease risk. The trade-off is clear: momentary indulgence pales against years of a healthy body. Here, success isn’t just a number on a scale but a sustained quality of life, won through far-sighted discipline. Your financial well-being is no different. There are countless examples to choose from, where myopic thinking can spell financial ruin. Take Facebook (Meta), one of the "Magnificent Seven" tech giants, in 2023, Meta's stock plummeted over 76% with a tremendous amount of bad news swirling around the company. A short-sighted investor, gripped by panic, might have sold at the bottom, locking in losses. But those with a longer view held firm, recognizing Meta's innovation and market dominance, and by end of 2024, the stock was up over 700% in just 24 months from its bottom. Myopic selling ignores the cycles of growth and recovery, while strategic vision capitalizes on them, illustrating how success in investing demands a steady gaze past temporary dips. In each case, medicine, health, and the markets, myopic thinking kills success by fixating on the now at the expense of the later. True achievement requires lifting our eyes to the horizon, weathering short-term storms, and trusting in the payoff of persistence. The road to triumph is rarely quick or easy, but it’s always worth the journey. -Paul R. Rossi, CFA  Understanding Investor Sentiment and the Dow Jones Industrial Average: A Guide for Savvy Investors There are bull markets and there are bear markets. The chart plots two key metrics: U.S. investor sentiment (measured as the %Bull-Bear Spread, in red) and the Dow Jones Industrial Average (DJIA, in deep blue). Together, they offer valuable insights into market dynamics and potential timing of investments. The chart reveals a fascinating interplay between investor sentiment and the DJIA. The red line, representing investor sentiment, fluctuates sharply, oscillating between bullish (positive percentages) and bearish (negative percentages) periods. The blue line, tracking the DJIA, shows the broader market trend over time, with notable peaks and troughs corresponding to economic events like the COVID-19 pandemic in 2020 and subsequent recoveries. During periods of extreme bullish sentiment (e.g., 2021, where the Bull-Bear Spread was near 40%), the DJIA continued to climb, suggesting that overly optimistic sentiment can precede sustained market growth. Conversely, during bearish periods (e.g., early 2020 or late 2022, with sentiment dipping below -20%), the DJIA often experiences sharp declines, reflecting market uncertainty or panic. However, the relationship isn’t perfectly linear. There are moments where high bullish sentiment coincides with market stagnation or even decline, indicating potential overconfidence or bubbles. Similarly, bearish sentiment doesn’t always lead to immediate drops in the DJIA, as markets can defy pessimism due to fundamental economic strength or external catalysts. So, how can investors use this information? For those considering buying, periods of extreme bearish sentiment (e.g., sentiment below -20%) might signal undervalued opportunities, as fear can drive prices below their intrinsic (true) value. This contrarian approach—buying when others are selling—can be rewarding if paired with thorough research into company fundamentals. For example, the bearish sentiment in early 2020, driven by the pandemic, was followed by a robust recovery in the DJIA, rewarding those who were willing to step into the market. On the flip side, investors contemplating selling might watch for extreme bullish sentiment (e.g., above 40%), which could indicate an overheated market ripe for a modest correction or large draw-down. The chart shows that such peaks in optimism, like those in 2021, often precede volatility or declines, offering a signal to lock in gains or rebalance portfolios. Of course, investor sentiment is just one piece of the puzzle. It should be combined with other indicators—such as economic data, interest rates, and corporate earnings—to form a comprehensive strategy. By understanding the nuanced relationship between sentiment and market performance, investors can make more informed decisions, balancing risk and reward. When putting money to work, its important to understand the current market sentiment as measured by the "%Bull-Bear Spread." -Paul R. Rossi, CFA |