On the ball
Federal Reserve Chair Kevin Warsh recently told investors to do their own work and focus on “the ball, not the referee.” It is a simple idea that is not easy to follow—especially with so much going on in the world.
Warren Buffett once said that “investing is simple, but not easy.” The sooner you figure out that investing is a daily practice of working hard to understand this difference, the better. I thought of this maxim from the Oracle of Omaha when new Federal Reserve Chair Kevin Warsh tried to tell the markets that the time of oracles is over.
Warsh told investors to do their own work and focus on “the ball, not the referee.” It is another simple idea that is not easy to follow—especially with so much going on in the world. Yet, doing the work to understand the underlying data is necessary to invest effectively today. Whether it is tariffs, AI, war in the Middle East, or stock markets in general, focusing on the data, rather than simply following the Oracles who make the headlines, has served us well this year.
Looking ahead, we will continue to watch the data the watchers are watching, and draw our own conclusions about the facts that might influence policymakers and impact the economy.
Our focus remains primarily on three factors: the durability of the AI investment cycle, the breadth and resilience of corporate earnings growth, and the path of inflation and monetary policy. Our base case remains constructive. We expect AI spending to remain robust, earnings growth to continue to broaden, and inflation to ease gradually. In this environment, we believe broad market indices can continue to move higher.
Yet, in this period of rapid change, we think it important that investors do not over-index on any single forecast. Instead, we prefer to think in scenarios about what could accelerate or hold back the market. Weaker-than-expected AI capex or monetization trends, a slowdown in corporate earnings growth, or a renewed inflation shock could all contribute to a more challenging backdrop. Investors should therefore aim to build portfolios that can participate in further market gains and be resilient across a range of outcomes.
For us, that means three priorities: putting cash to work deliberately, positioning to capture market upside through diversified equity exposure and targeted exposure to structural trends, and improving the resilience of the core portfolio through capital preservation strategies, locking in yields, and broader diversification into alternatives and commodities.
