First, let’s start off with a bit of good news. As most of you are aware, Goldman Sachs was late getting the 1099 tax information to you this past spring. Because of this, they have waived their quarterly custodial charge for the second quarter of 2025. This gesture was not sparked by pressure from Sycamore or our clients, but merely to make amends. We appreciate this benefit coming to our clients and know you will too. By the way, we do not own Goldman (obviously), and Goldman does not have any ownership or control of Sycamore (not as obvious). Goldman serves as custodian of your Sycamore portfolios at the request of Sycamore. As a custodian, they hold your securities and cash. They also execute trades for your portfolios when instructed by Sycamore to do so. They collect dividends, interest from securities, provide account statements, and tax documents. We believe this has been and will continue to be a very good long-term relationship for our clients, and the above gesture gives us more confidence in Goldman. Also, please know that Goldman DOES NOT make any investment decisions for your portfolio(s); we do that here in Sycamore.

Performance and the Markets

At the end of the first quarter of 2025, there was considerable uncertainty surrounding tariffs. That has subsided, and it appears that investors are once again making decisions based (at least somewhat) on the fundamentals of the companies. As you know, Sycamore is a fan of analyzing fundamentals because we believe they provide guidance when the markets are not as “heady” as they have been recently. Of course, we are still dealing with the Magnificent Seven…Nvidia, Alphabet (Google), Amazon, Apple, Microsoft, Meta (Facebook), and Tesla. These seven stocks now make up a sizable portion of many indexes and professionally managed mutual funds. Although we believe these companies are viable in the long run, we are somewhat concerned that they are overvalued at this point. Let us give you an idea of how these seven stocks have performed so far this year. There is an exchange-traded fund you can purchase that holds just these seven securities, named Roundhill Magnificent Seven ETF. In the first quarter, this fund declined by about 15.7% and in the second quarter, it increased by about 20.9%. We believe this level of volatility is excessive for a YTD gain of only 1.9% through mid-year. Enough about the MAG 7! Overall, the markets have recovered from their first-quarter decline, and so have your portfolios. Our Growth and Income composite gained about 4.8% for the second quarter and is up about 4.2% YTD through 6/30 gross of fees (we didn’t decline much during the first quarter). This is a bit less than we would expect, but certainly in the ballpark. We do not feel the overall markets are a bargain like they were during the Great Recession in 2009 (remember that?), but we are certainly still finding several stocks that we think are worth owning and are fairly valued. We remain optimistic about our economy and the holdings in your portfolio(s). Onward and upward!

Our Economy

The Atlanta Federal Reserve Bank is now predicting that the economy grew at about an annualized rate of 2.4% during the second quarter. This is not official, but it should be in the neighborhood. That means we have recovered from the slight setback in the first quarter. The economy has been in a ‘slow-growth’ mode pretty much since the recession of 2008-2009, and during that time, our composite has gained roughly 13% per year, so more ‘slow-growth’ will be fine with us! The Federal Reserve Bank has kept interest rates steady so far this year, but if we continue to have relatively low inflation, we do expect a drop of 0.25% or 0.5% by the end of 2025. Unemployment remains at relatively low rates and seems to have stabilized, and according to the Bureau of Labor Statistics’ most recent report, the economy is creating jobs at a good pace of about 150,000 per month. The Bureau of Census reports that retail sales remain strong. On the negative side, the U.S Department of Commerce continues to report a decline in housing starts, and the Bureau of Economic Analysis has shown a modest decline in auto sales. Overall, we believe the economy will continue to provide a solid foundation for companies to grow profits, and as we mentioned earlier, we are finding several ‘bargains’ and remain optimistic.

Purchase and sale activity during Q-3

Purchases – Hillenbrand (HI), B&G Foods (BGS), Helen of Troy (HELE), and ATN International (ATNI).
Sales – Franklin Resources (BEN) and Amentum (AMTM)

Thanks for your business and trust.

Sincerely,
Brent A. Yard, CFP®

   * Data not audited
 ** This article is distributed for general informational and educational purposes and is not intended to constitute legal, tax, accounting, or investment advice.
*** Past performance does not assure future results. Investors cannot invest directly in the stock market indexes such as the S&P 500. Investment return and principal value of an investment will fluctuate. Investor value, when sold, may be worth more or less than its original cost.