We had the pleasure of speaking at Orion Ascent last week, sharing insights on the market and multi-manager portfolio construction. Through this presentation, and the conversations held with advisors at the event, we’ve compiled three takeaways from the event that we believe are relevant to any advisor managing client assets today.
We’ll start with a practical takeaway from our discussion on the markets today, and then work through key concepts on portfolio construction and advisory practice management.
In The Markets — Prioritize Evaluations Over Expectations
Inflation wasn’t supposed to be this sticky. The market expected more and larger rate cuts. The economy should have entered a recession (multiple times). Looking forward, earnings growth is expected in the double digits to meet lofty stock valuations – and the heavily concentrated AI tech stocks look to continue their dominance.
Assessing the environment is always a good thing, and keeping an eye on the future is necessary in financial advice. However, it’s always important to remember that expectations can change rapidly, particularly in environments with elevated risk, such as the high market valuations we see today. Being prepared for these changes is obviously of the upmost importance in managing the client investment journey.
Today, the S&P 500 is trading in the 89th percentile of its historical P/E ratio. On top of that, eight stocks account for 32% of the index’s market cap. We can point to a number of historical examples of concentrated markets, which tend to dilute or broaden out. However, as AI develops and becomes more pervasive, the current market leaders may continue their dominance. On the other hand, there’s also plenty of room for new players; something we got a taste of with the DeepSeek wave. And looking at earnings, we see lofty expectations for growth to meet today’s elevated valuations. Earnings are commonly revised down as the reporting date draws near, but to what degree is hard to say.
The fact of the matter is every market is different and each instance brings unique nuances that must be evaluated. And that’s the key takeaway – evaluation. Risk evaluation and portfolio structure becomes even more important in overvalued markets.
Today, AAMA favors sectors with below-market price and earnings volatility, with acceptable 12-month earnings growth forecasts. Healthcare leads that list with double digit earnings growth forecast and below-market price and earnings volatility. Consumer Staples follows. While Staples has lower-than-market forecasted earnings (thought still positive), it also demonstrates well-below-market price and earnings volatility. Financials trails, with a rich valuation, a flat earnings forecast, and higher relative price and earnings volatility. A financials underweight spans all of our portfolios.
Why are we positioned this way? Not in expectation of weakness or strength in particular market segments. We do not seek to predict the future, which no strategist can do reliably. Rather, our positioning flows from a continual evaluation on measurable market metrics, focusing on balancing risk and reward in line with the each model portfolio’s risk profile.
In Investing — There's Nothing Wrong With Staying In Your Lane
In financial advice, it’s not uncommon to wear more than one hat. Strategists and advisors alike are faced with challenges of staying atop of the markets, managing clients, and a myriad of responsibilities that come with running a business. One point of conversation we had at Orion Ascent is the power of partnership – putting the right people and resources in place to achieve a goal as effectively as possible.
Just in time for the Super Bowl, we find a great analogy for this in the NFL. On any given Sunday, you will see an average of 12 coaches on the sideline. That’s not because the head coach doesn’t have a strong understanding of their team. Rather, it’s about leveraging unique, focused expertise to give the team the best shot at displaying excellence on the field. The quarterback coach and defensive linemen coach are equally important – but with very different competencies. And the organization needs a special teams coordinator just as much as an offensive coordinator. Each coach plays a role, and complete focus and dedication to that role supports overall success.
We look at portfolio construction in a similar light. In identifying partners with clear core competencies, you (the advisor, as the head coach) can begin to build out your organization to give your team the best shot at excelling on the field (in the client’s portfolio).
Using AAMA as an example, we are a solid core beta play within the portfolio, delivering fundamentally-rooted portfolios that are built on the black and white statistics of sector valuation and market pricing. We are that stable base that is going to be in the market – with a fundamental tilt toward relatively attractive sectors. But, AAMA is not a heavily active / tactical manager and we don’t manage alternatives, or downside diversifying portfolios. And that’s ok, because we are completely focused on serving as that core piece of the portfolio.
For a greater tactical tilt, we would advocate blending us with any number of specialized, tactical managers on the platform. And for uncorrelated, downside protection, we would advocate seeking out one of our peers that is hyper focused on that discipline.
There’s a lot of power in knowing where you fit in the process and finding partners to fill the gaps to create a comprehensive experience for clients. That’s the art of portfolio construction — find the strategist partners that will help you do this. No one strategist has all the answers. If a strategist indicates they do, it might be a sign that they don’t have your client’s best interest at heart!
In Client Management — Collaboration Is The Secret Sauce
Our favorite part of these conferences isn’t the sessions, the entertainment, or the venue (though we certainly appreciate warm weather in the winter!). It’s the conversations that happen in between. And that brings us to the third takeaway.
Collaboration is the “secret sauce” to success in this business.
We’ve long advocated the benefit of collaboration in portfolio construction (as we mentioned above). To make this happen, strategists need to be collaborative with other strategists. In being collaborative, we become better versed in the options available to advisors and are a better resource when it comes to discussions on portfolio blending.
Likewise, when strategists and advisors collaborate, we often find that the client management side of the business becomes easier. When clients have questions on the markets, who better to source information from than your strategists, who are head down in the numbers every day. And when you have a unique investment case or a client with a particularly challenging financial situation, strategists can provide a unique perspective to help you find the right mix of solutions for that situation.
And finally, reversing perspectives, when advisors pose questions to strategists and share the concerns of their clients, we become more adept at understanding your challenges and providing the information that is relevant and helpful as you manage your clients.
Technology is a huge point of emphasis in our industry, and that’s certainly important. But the lifeblood of our business still revolves around relationships, information sharing, and collaboration. That’s something that AAMA continues to focus on today – being the best partner we can for the advisors we serve, and in turn, their clients.
Orion Ascent 2025 was an awesome event, and AAMA was thrilled to be a part of it. If you have any questions about the markets, our strategies, or blending portfolios to meet the needs of a client, we’d love to speak with you. Click here to contact our team, shoot us a message at engage@aamamail.com, or give us a call at 614-717-4451.
The information and opinions in this report have been prepared by the investment staff of Advanced Asset Management Advisors (AAMA). This report is based upon information available to the public. The information herein is believed to be reliable and has been obtained from sources believed to be reliable, but AAMA makes no representation as to the accuracy or completeness of such information. Opinions, estimates and projections in this report constitute AAMA’s judgment and are subject to change without notice. This report is provided for informational purposes only. It is not to be construed as a recommendation to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy in any jurisdiction in which such an offer or solicitation would violate applicable laws or regulations.
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