The Three Big Shifts Every Wealth Manager Should Be Watching
In this issue:
Stop timing the market: what I wish I knew when I started investing
Private credit's explosive growth: why HNWIs are making the switch
How to think of US-China competition: the Engineering State vs. the Innovation Nation
1. Stop timing the market: what I wish I knew when I started investing
We Study Billionaires podcast, Ep. 763: Investing Lessons for My 18-Year-Old Self w/ Clay Finck (Oct. 23, 2025)
revenue growth slows to 10%? If margins compress by 5%? If a key executive leaves? Having clear sell criteria prevents emotional decisions and forces you to think through the investment thesis upfront.
TLDR:
The best time to invest is today – the S&P 500 has tripled since 2017 despite constant warnings that markets were "overvalued"
Concentrated portfolios of 15-25 high-conviction stocks can outperform, but only if you can handle the volatility without selling
Mega trends like digital advertising and semiconductors offer tailwinds that make it easier for great businesses to compound even when they make mistakes
Clay Finck started his investing journey like many people do: losing all his money. His first $1,000 went into an offshore drilling company that promptly went to zero. After that experience, combined with constant media warnings that the market was "overvalued," he was terrified to invest again. Looking back, that fear cost him dearly. From 2017 when he graduated college until today, the S&P 500 has nearly tripled. The lesson? The biggest risk isn't buying at the top – it's staying on the sidelines waiting for the perfect moment.
Why market timing is a losing game
When COVID crashed markets in March 2020, stocks dropped 30% in weeks. At that moment, wn. Earnings were collapsing. People were panicking. But markets bottomed within weeks and screamed to new highs. This is the paradox: the best time to buy always feels like the worst time to buy.
Peter Lynch said it best: "Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves."
If you seriously examine the track record of market forecasters, you'll find they're wrong far more often than they're right. Even the investors who successfully predicted the 2008 financial crisis have typically been wrong about everything since.
The case for concentration
If you buy and hold 15-25 exceptional businesses and avoid tinkering with the portfolio, you only need a couple of them to do exceptionally well to drive outstanding returns. This is the "barbell" approach – a few huge winners carry the entire portfolio.
The catch is that concentrated portfolios are volatile. You need the emotional discipline to watch your portfolio swing 20-30% without panicking and selling. Most investors can't do this, which is why concentration isn't for everyone.
But for investors who can handle volatility and have strong conviction in their picks, the math is compelling. Your best idea will almost always outperform your 50th best idea.
Riding mega trends amplifies everything
One of the smartest strategies is to identify multi-decade trends and invest in the clear leaders. Finck highlights digital advertising as a perfect example. Meta, Google, and Amazon dominate because they offer something traditional advertising can't: data. You can see exactly which ads work and which don't, something impossible with billboards or TV commercials.
The result? Meta has grown revenue at 28% annually for a decade. This isn't luck – it's a structural shift from traditional to digital advertising that's still in early innings. The same logic applies to semiconductors. As the world becomes more digital, demand for chips grows exponentially. Companies like ASML and TSMC have near-monopolies in critical parts of the semiconductor manufacturing process.
When you invest in businesses riding mega trends, they can afford to make mistakes and still grow. That's investing with the wind at your back instead of fighting for scraps in declining industries.
Understanding what makes you sell
Here's a less obvious lesson: before you buy any stock, write down exactly what would make you sell. Not vague ideas like "if it goes down a lot," but specific conditions. Would you sell if 1
2. Private credit's explosive growth: why HNWIs are making the switch
Masters in Business podcast by Bloomberg, Episode: The Future of Private Credit with Erik Hirsch (Aug. 1, 2025)
TLDR
Private credit markets are exploding as banks retreat from mid-market lending, creating opportunities for investors seeking yield with downside protection
Direct lending offers fixed income alternatives with higher returns, but due diligence is critical as not all private credit strategies are created equal
Advisors should understand how to position private credit in client portfolios as an alternative to traditional bonds
Why private credit is booming right now
After the 2008 financial crisis, regulators cracked down on banks. They made it much harder and more expensive for banks to lend to mid-sized companies – those too big for a simple bank loan but too small to issue public bonds. This created a massive gap in the market. Mid-market companies still needed to borrow money to grow, refinance debt, or make acquisitions. But traditional lenders couldn't serve them anymore.
That's where private credit stepped in. Private credit funds are essentially taking over the role that banks used to play. They're lending directly to these mid-sized businesses, but with a twist: they're getting paid much better for it. While investment-grade corporate bonds might yield 4-5%, private credit deals can offer 8-12% or more. For investors who've been starving for yield in a low-rate environment, this is extremely attractive.
What makes private credit different from bonds
When you buy a corporate bond, you're one of potentially thousands of bondholders. If the company struggles, you have very little control. In private credit, it's different. The lender often has direct access to management, detailed financial covenants, and sometimes even a seat at the table for major decisions. For example, a private credit lender might require monthly financial reports and have the right to approve any debt above a certain threshold.
This structure provides some downside protection mechanisms that public bonds can’t offer. If a company starts to struggle, private credit lenders can step in early – restructuring terms, demanding operational changes, or even replacing management. It's this combination of higher yield and greater control that makes private credit compelling for risk-aware investors.
The due diligence challenge
Here's the catch: not all private credit is created equal. The market is growing so fast that quality varies dramatically. Hirsch emphasized that rigorous due diligence is non-negotiable. You need to understand not just the borrower, but also the fund manager's track record, their underwriting standards, and how they handle troubled credits.
For financial advisors, this means you can't just check a box and add "private credit" to a client's portfolio. You need to evaluate specific funds, understand their strategies, and make sure they align with your client's risk tolerance and liquidity needs. Some private credit funds are highly liquid, others lock up capital for years. Some focus on senior secured loans with low default rates, others chase riskier subordinated debt for higher returns.
3. How to think of US-China competition: the Engineering State vs. the Innovation Nation
Invest Like the Best podcast, Episode: China vs America: The Battle for Global Dominance Explained (Oct. 16, 2025)
TLDR
China treats society like an engineering problem with top-down control, while America's messy pluralism drives bottom-up innovation – both approaches have strengths
"The future is made up of a series of short runs" – China's ability to execute flawlessly in 5-year increments matters more than long-term predictions
Geopolitical risk is now a first-order portfolio consideration, not an afterthought: supply chain diversification and exposure assessment are critical
Americans often misunderstand China by viewing it through a Western lens. We see their government control and assume inefficiency. But that misses the point. China isn't trying to be America. They're playing a completely different game, and understanding that game is crucial for investors trying to position portfolios in an increasingly bipolar world.
The engineering mindset that shapes China
China's leadership thinks like engineers solving a problem. They set clear targets: lift 800 million people out of poverty, build high-speed rail connecting every major city, become self-sufficient in semiconductors. And then, they marshal resources to achieve those targets. This isn't democratic, it's not bottom-up, but it can be remarkably effective.
Think about China's massive infrastructure projects. The Three Gorges Dam. Hundreds of miles of high-speed rail built in a decade. Entire cities constructed from scratch. These are feats of top-down planning and execution that would be nearly impossible in a democratic system where every project faces endless litigation and community pushback.
America's chaotic but powerful advantage
America's strength is its opposite approach: pluralism and bottom-up innovation. We're messy and inefficient, but that chaos creates space for experimentation and risk-taking that centralized systems can't match. Tech breakthroughs don't come from five-year plans. They come from garage startups, university research labs, and entrepreneurs willing to fail.
The person interviewed, who lived in China for six years starting in 2017, watched Trump launch the trade war and sanctions against Huawei and other Chinese entities. At the time, it seemed destabilizing. But what emerged was a clear articulation of strategic competition that both countries now understand. This clarity, while uncomfortable, actually reduces certain kinds of risk because the rules of engagement are more explicit.
Thinking in short runs, not long-term predictions
One of the most important insights is that "the future is made up of a series of short runs." Instead of trying to predict whether China or America will "win" over 50 years, focus on the next 5-10 years. Can China maintain its economic momentum? Can they navigate demographic decline and debt burdens? Can America maintain technological leadership despite political dysfunction?
These near-term questions matter more for portfolio positioning than grand historical theories. For example, if China can execute effectively on semiconductors and artificial intelligence over the next five years, that shifts the global technology landscape significantly, even if America maintains long-term advantages.
Practical implications for portfolios
First, geopolitical risk is no longer a footnote. Companies with heavy exposure to China face regulatory risk, supply chain disruption, and potential sanctions. Diversification matters not just across asset classes but across geographies.
Second, supply chains are being redrawn. The era of maximum efficiency through global integration is over. Companies are "friend-shoring", i.e., moving production to allied countries even if it costs more. This creates opportunities in places like Vietnam, Mexico, and India, while creating challenges for companies dependent on Chinese manufacturing.
Third, technology decoupling is real. China is building parallel systems in semiconductors, AI, and software to reduce dependence on American technology. This creates duplicative investment and inefficiency, but also creates opportunities for companies positioned to serve one market or the other.
Disclaimer
This newsletter is for informational and educational purposes only and should not be construed as personalized financial, tax, legal, or investment advice. The strategies and opinions discussed may not be suitable for your individual circumstances. Always consult a qualified financial advisor, tax professional, or attorney before making any decisions that could affect your finances. While we strive for accuracy, we make no representations or warranties about the completeness or reliability of the information provided. Past performance is not indicative of future results. All investments involve risk, including the possible loss of principal. The publisher, authors, and affiliated parties expressly disclaim any liability for actions taken or not taken based on the contents of this publication.
