Near-record asset allocations to stocks, plus 🧁 weekend sprinkles 🧁
The Sandbox Daily (6.20.2025)
Welcome, Sandbox friends.
Today’s Daily discusses:
near-record asset allocations to stocks
weekend sprinkles
Let’s dig in.
Blake
Markets in review
EQUITIES: Dow +0.08% | Russell 2000 -0.17% | S&P 500 -0.22% | Nasdaq 100 -0.43%
FIXED INCOME: Barclays Agg Bond +0.09% | High Yield +0.31% | 2yr UST 3.908% | 10yr UST 4.379%
COMMODITIES: Brent Crude -2.04% to $77.24/barrel. Gold -0.81% to $3,380.6/oz.
BITCOIN: -0.72% to $103,483
US DOLLAR INDEX: -0.11% to 98.801
CBOE TOTAL PUT/CALL RATIO: 0.97
VIX: -6.99% to 20.62
Quote of the day
“The WIN is coming. Don't let the WHEN worry you!”
- Unknown
Near-record asset allocations to stocks
President Eisenhower once said: “In preparing for battle I have always found that plans are useless, but planning is indispensable.”
At risk of falsely equivalencing investing and world wars, I have a similar attitude when it comes to 6-month forecasts.
Forecasts are helpful thought processes to build out different scenarios and our responses to each, but we should all recognize they’ll need to be adjusted throughout the forecast period as new information is reported and subsequently incorporated into models.
The first half of 2025 are a case in point.
While tariffs were a potential threat to the markets – the same way they were during the Trump 45 administration – few (including many in the White House) forecasted the magnitude of the Liberation Day tariffs and the market volatility around them.
Looking ahead to the 2nd half, the market will be working through a number of potential disruptions: earnings revisions, the Israel-Iran conflict and the possible involvement from the United States, reciprocal tariffs, negotiating trade deals, the Fed balancing its different goals between softer labor market trends emerging and the coming upward inflationary pressures from tariffs, elevated valuation multiples, and the timing of resumption to the Fed’s interest rate cutting cycle.
Markets always climb the wall of worry, so this list is no different than the past.
The specific collection of inputs may be unique to this point in time, but each one on a standalone basis is something the market has worked through before.
I see another potential headwind coming from positioning.
Prices of assets often move up or down based on investor positioning as capital flows into areas of strength and out of asset classes exhibiting weakness.
Understanding how investors are positioned is an important exercise that the best investors track and study.
Asset allocation positioning is beneficial because it shows what investors are actually doing with their money, as opposed to survey data that only reports what investors say they’re doing.
In other words: watch what they do, not what they say.
The Federal Reserve Board recently updated its Financial Accounts report for Q1. While the data is only through Q1, it is still helpful for the long-term outlook.
The data shows households hold 48% of their financial assets in stocks, which is slightly below the record 49.3% in Q4 but a level that is still higher than all prior major market peaks.
Ok, so the “retail” crowd appears to be fully invested.
What about the institutional money?
It appears households are not the only group of investors to be overweight stocks.
Institutions – including insurance companies, pension funds, endowments, and the like – are also heavily weighted to stocks, however they held a higher share at the peaks in 2000 and 2007.
This tells me two things that are diametrically opposed to one another:
Investors have been comfortable maintaining this level of stock ownership because they remain optimistic on the intermediate- to long-term prospects of the stock market and by extension the U.S. economy.
Along with high valuations, full positioning doesn’t leave much room for future buying power beyond the margin. Any change in risk appetite, or a series of negative risks materializing (as if we haven’t seen enough in 1H25 !!), could leave the market susceptible to a leg lower.
As is the life of an investor, one must always balance upside risks against downside risks and be comfortable in doing so.
Source: Ned Davis Research
🧁 Weekend sprinkles 🧁
Here are the ideas, sights, and sounds that caught my attention this week – perfect for quiet time over the weekend.
Blogs
OptimistiCallie – My Money Story (Callie Cox)
Wall Street Journal – Red vs. Blue is Dividing Stock Portfolios Like Never Before (Gunjan Banerji)
Morningstar – My Baptism by FIRE: Lessons on Financial Independence (Christine Benz)
Oaktree – More on Repealing the Laws of Economics (Howard Marks)
Podcasts
Facts vs. Feelings with Ryan Detrick & Sonu Varghese – Going with the Flow with Sam Ro (YouTube, Spotify, Apple Podcasts)
BG2 Pod with Brad Gerstner & Bill Gurley – Coatue’s Laffont Brothers: AI, VC Markets, Macro, US Debt, Crypto, and IPOs (YouTube, Spotify, Apple Podcasts)
Movies/TV Shows
The Amateur – Rami Malek, Rachel Brosnahan, Jon Bernthal, Laurence Fishburne (IMDB, YouTube)
Music
Stick Figure – World on Fire (feat. Slightly Stoopid) (YouTube, Spotify, Apple Music)
Books
Sahil Bloom – The 5 Types of Wealth: A Transformative Guide to Design Your Dream Life (Amazon)
Fun
Rick Rubin on success and happiness (Instagram)
That’s all for today.
Blake
Questions about your financial goals or future?
Connect with a Sandbox financial advisor – our team is here to support you every step of the way!
Welcome to The Sandbox Daily, a daily curation of relevant research at the intersection of markets, economics, and lifestyle. We are committed to delivering high-quality and timely content to help investors make sense of capital markets.
Blake Millard is the Director of Investments at Sandbox Financial Partners, a Registered Investment Advisor. All opinions expressed here are solely his opinion and do not express or reflect the opinion of Sandbox Financial Partners. This Substack channel is for informational purposes only and should not be construed as investment advice. The information and opinions provided within should not be taken as specific advice on the merits of any investment decision by the reader. Investors should conduct their own due diligence regarding the prospects of any security discussed herein based on such investors’ own review of publicly available information. Clients of Sandbox Financial Partners may maintain positions in the markets, indexes, corporations, and/or securities discussed within The Sandbox Daily. Any projections, market outlooks, or estimates stated here are forward looking statements and are inherently unreliable; they are based upon certain assumptions and should not be construed to be indicative of the actual events that will occur.
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