Laura Kuntz, CPA/PFS, MBT, Chief Investment Officer
September 30, 2025
We continue to be very proud of our new website, especially having articulated our trademarked Laurel Wealth Harmony Process. We continue to be delighted to serve new clients, especially those going through the life transitions of retirement, loss of spouse, building generational wealth, and to assist the children of our clients. We are here to serve.
Investing. In the investment world, we often think of the stock market as being loosely tied to the economy. If one looks at the last three months, one would say that the tie has been very loose, with the stock market increasing while the economy has been softening:
-Stock market increases (July 1 to Sept 30):
-S&P 500, largest U.S. stocks1 + 8%
-Russell 2000, mid size to smaller stocks2 +12%
-MSCI EAFE, international stocks3 + 5%
-U.S. economy softening:
-Job growth has slowed and unemployment has slightly risen to 4.3%, the highest rate since 2021.
Inflation continues to largely be absorbed by importers and is likely to work its way through the system, possibly culminating, by our pencil, in a 3.5% rate by mid 2026. Of course, this rate is nowhere near the high 9% inflation we saw in 2022, but it is still higher than the 2% the Federal Reserve Board targets.
-Second quarter growth was high at 3.8%, but we believe it is likely that it will be revised down to approximately 3%. With the first quarter’s growth having come in negative, the Federal Reserve projected 2025 annual economic growth rate is a modest 1.6%.
Outlook. The stock market has been buoyed by AI (artificial intelligence), a sense that deregulation will continue, and by an expectation of interest rate decreases. We are in the part of the economic cycle where softening economic data can produce more “juice” from interest rate decreases, which can make the stock market and economy look disconnected. Due to these likely interest rate decreases, we believe that the stock market both in the U.S. and around the world may have a modest level of positive momentum over the next 18 months.
At the same time, U.S. large stock values are stretched: the S&P 500 (500 largest stocks in the U.S.) are at approximately 23 times forward earnings, a valuation level last sustainably achieved during the tech bubble of 1997 – 1999. We can think of the balloon as being overly full, giving it a thin membrane, vulnerable to a pop from a not very sharp needle. In our view, this is not a time to substantially overweight stocks.
Government Shutdown. We’ve been through this before, haven’t we? Past shutdowns have tended to have only a modest economic/investment impact. Shutdowns generally resolve once it becomes clear what message is winning with the public – that’s when compromise happens. More here. Of course, you know that we stand ready to buy if volatility – and valuation opportunities – materialize.
LWP Strategies. Used as suitable:We are generally retaining stocks at a neutral rate as compared to target. I.e., we are fully invested, but not taking on extra risk.Our outlook for international investing continues positive due to a dollar that is likely to continue to fall modestly over time, and also due to strong earnings we are seeing out of a variety of international companies. We suspect we’ll generally continue current weightings of international stocks and bonds, and potentially even increase these.An interest-rate-falling environment can be good for the impacted bonds, and during this cycle, we think that will be the shorter- to mid-term part of the maturity spectrum. We’ll tend to overweight these, and we’ll retain the bond alternatives that have generally treated invested clients so favorably so far this year.Our Investment Committee continues to meet monthly to evaluate strategies from across the globe. Let us know any investment questions – we are delighted to answer.
Financial and Tax Planning. Mallory Kretman, CFP, Wealth Manager/Shareholder continues to lead our team in financial planning strategies through a monthly meeting where we focus on the latest in tax law changes and opportunities. All three of our Wealth Managers — Mallory, Jesse Kuusisto, CFP, and I — will be attending what we believe is one of the best financial planning conferences in the nation, hosted right here in St. Paul, the ASCEND conference.We’ve already announced that Leanna Hochmuth has joined our team as a Client Service Specialist. We have been working with Leanna for about three weeks now – and I am impressed. Leanna brings confidence and four years of banking experience. I know that she is interested in getting to know you and being helpful to you.I so appreciate the opportunity you give us to bring wisdom and value to you. Please let us know your comments and questions. We are always delighted to hear from you.
DEFINITIONS
1 S&P 500 index: This is an index of the 500 largest stocks in the U.S. It is subject to substantial price fluctuation.
2 Russell 2000 Index: The Russell 2000 Index is a small-cap U.S. stock market index that makes up the smallest 2,000 stocks in the Russell Index. It was started by the Frank Russell Company in 1984. The index is maintained by FTSE Russell, a subsidiary of the London Stock Exchange Group.
3 International Stocks are represented by the iShares MSCI EAFE ETF, which seeks to track the investment results, before fees and expenses, of an index composed of large- and mid-capitalization developed market equities, excluding the U.S. and Canada. measured by the MSCI EAFE. It includes a broad range of companies in Europe, Australia, Asia, and the Far East. International stocks are subject to company, currency, and price risks. Data from yahoofinance.com and Envestnet Tamarac.
IMPORTANT NOTICE AND DISCLOSURE
The foregoing content reflects the opinions of Laurel Wealth Planning LLC and is subject to change at any time without notice. Content provided herein has been obtained from sources considered reliable, but we do not guarantee the accuracy, or the completeness of any description of securities, markets, or developments mentioned. The content is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions, or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. LWP is a wealth management firm and does not practice law or accountancy.
Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful.
As a precautionary measure, we cannot rely on e-mail requests to authorize, direct, or affect the purchase or sale of any security, wire transfer, or to affect any other transactions. Such requests, orders, or other instructions sent via email should be confirmed verbally, or by written instructions faxed to 952-854-6250 prior to their anticipated execution. We are unable to ensure that email sent to you from us, or sent from you to us, will be received. Please contact us at 952-854-6250 if there is any change in your financial situation, needs, goals, or objectives, or if you wish to initiate any restrictions on the management of the account or modify existing restrictions.
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