The Financial Market Is Changing. Has Your Portfolio Changed With It?
There are three forces reshaping markets right now.
Not predictions. Not something that might happen five or ten years from now.
They're already happening.
I call them change acceleration, shifting gears, and the power surge.
And if you're building wealth, or trying to protect the wealth you've already built, I think they're worth paying attention to.
Not because I know what's going to happen next.
I don't.
Neither does the guy yelling about the market on television. Neither does the economist with the impressive title. And neither does your brother-in-law who somehow became an artificial intelligence expert six months ago.
That's actually the point.
You don't need to predict the future. You need an investment process built for a future you can't predict.
And right now, I think that's more important than ever.
Force #1: Market Change Is Accelerating
You can feel this one.
Everything is moving faster.
Artificial intelligence. Technology. Social media. Geopolitics. Supply chains. Information itself.
Things that once took years to develop can seemingly change in months.
The problem is that a lot of the financial industry's assumptions were built during a slower-moving world.
Think about it like this.
Using an old, static investment model to navigate a rapidly changing market can be a little like pulling out last year's Farmer's Almanac to decide whether it's going to be nice enough
to go to the beach tomorrow.
It may contain useful information.
I just wouldn't bet my beach day on it.
The same principle applies to investing.
What does financial market change acceleration mean for your portfolio?
It doesn't mean you should constantly trade.
It doesn't mean you should chase every new investment theme.
And it certainly doesn't mean changing your portfolio every time somebody says something scary on CNBC.
It means the process used to manage a portfolio needs to be capable of recognizing when conditions have materially changed.
You don't want your investment decisions to depend on whether somebody on your financial team woke up feeling optimistic or pessimistic that morning.You want data.
You want evidence.
You want repeatable signals that can help us understand what's actually happening beneath the headlines.
That's one reason my team and I have spent so much time developing a systematic, data-driven investment process.
The goal isn't to predict every turn.
The goal is to recognize meaningful change and have a process for responding to it.
Force #2: The Economy Has Shifted Gears
For a long time, investors became accustomed to a particular economic environment.
Low interest rates.
Relatively tame inflation.
Globalization pushing production toward wherever things could be made most efficiently.
Cheap capital.
Then the gears started changing.
We've experienced higher interest rates, inflation pressures, labor constraints, geopolitical tensions, enormous government spending and a renewed focus on domestic manufacturing
and supply-chain security.
Waiting for the investment environment of the 2010s to return is a little like waiting for your twenties to come back.
Cute idea.
But I wouldn't build my financial plan around it.
What happened to the traditional 60/40 portfolio?
For decades, one of the most common portfolio strategies has been roughly 60% stocks and 40% bonds.
The basic idea makes sense. Stocks provide growth. Bonds provide stability. When stocks struggle, bonds have historically had the potential to soften the blow.
Then 2022 happened.
Stocks and bonds both experienced significant declines at the same time. That was painful for investors who believed the bond side of their portfolio would automatically serve as the airbag when stocks fell.
Does that mean the 60/40 portfolio is dead?
No.
I think that's too simplistic.
But it does remind us of something important:
Investment relationships aren't laws of physics.
Just because two investments behaved a certain way for the last 20 years doesn't guarantee they'll behave the same way for the next 20.
And simply owning different things doesn't necessarily mean you're diversified against different risks.
Diversification Should Be About Behavior, Not Just Labels
Imagine opening a portfolio and seeing:
U.S. stocks.
International stocks.
Bonds.
Real estate.
Maybe a few funds with impressive names.
It certainly looks diversified.
But here's the question I care about:
What causes each of those investments to go up or down?
Because if several different investments depend on the same underlying economic
conditions, your portfolio may be less diversified than it appears.
That's why we believe diversification needs to go deeper than simply checking different asset-class boxes.
We're looking at relationships between investments.
We're looking at risk.
We're looking at trends.
We're looking at how different parts of the portfolio behave under different market conditions.
And we're asking a question I think every investor should occasionally ask:
If the assumptions underneath my portfolio changed, would my portfolio know it?
Force #3: AI Is Creating a Power Surge
Everybody wants to talk about artificial intelligence.
Which company has the best model?
Who makes the best chips?
Who wins the AI race?
Those are interesting questions.
But I think there's another question that's just as interesting:
What does all this artificial intelligence physically require?
Because AI doesn't run on ideas.
It runs on electricity.
Data centers require enormous amounts of power.
That power requires generation.
It requires transmission.
It requires transformers.
It requires grid capacity.
And building all of that requires enormous quantities of physical infrastructure and raw materials.
So underneath the AI revolution is another story:
An energy and infrastructure story.
And it's a big one.
The International Energy Agency estimates that global data-center electricity consumption could roughly double between 2025 and 2030. In the United States, data centers are expected to account for roughly half of the growth in electricity demand through 2030.
That's not some theoretical trend 20 years away. It's happening now.
Looking Beyond the Obvious AI Investment
This is where investment thinking gets interesting.
Instead of asking:
"Which AI stock should I buy?"
We can ask:
What has to happen if AI continues growing?
Data centers need electricity.
More electricity may require additional generation.
Moving that electricity requires transmission infrastructure.
Building the infrastructure requires equipment.
Equipment requires materials.
Suddenly the AI investment story isn't only about technology companies.
It's potentially connected to utilities, power generation, industrial companies, grid equipment, copper, steel, infrastructure and supply chains.
Now, does that mean every company connected to electricity or copper is suddenly a great investment?
Of course not.
Price matters.
Valuation matters.
Timing matters.
Risk matters.
But it illustrates how we think about large structural changes.
Don't just look at the headline. Follow the economic chain underneath it.
So How Should We Build Portfolios for Today’s Environment?
This is where I want to be careful.
I don't believe the answer is making one giant bet on AI, electricity, inflation, interest rates, or anything else.
That's just another form of prediction.
Instead, our team is focused on building portfolios around a repeatable process.
1. We follow evidence instead of headlines.
Markets generate enormous amounts of information.
Price trends, momentum, volatility, correlations, economic data and other signals can help us understand what is actually happening, not what someone thinks should be happening.
Our investment process is designed to use data to help remove as much emotion as possible from investment decisions.
Because fear and greed are lousy portfolio managers.
2. We believe portfolios should be able to adapt.
Long-term investing doesn't have to mean ignoring changing conditions.
There's a big difference between reacting emotionally to every market move and systematically recognizing that the investment environment has changed.
We want a portfolio built with the ability to respond to meaningful evidence rather than remain permanently anchored to assumptions made years ago.
3. We diversify based on risk, not just investment names.
Owning ten funds isn't particularly helpful if all ten depend on the same thing happening.
We want to understand what risks we're actually taking and how different investments may behave when the market environment changes.
True diversification isn't about how many boxes you've checked.
It's about what happens when one of your assumptions is wrong.
4. We look underneath major economic trends.
AI is a perfect example.
We aren't only interested in the obvious winners getting all the headlines.
We're interested in the second- and third-order effects.
Power.
Infrastructure.
Materials.
Supply chains.
Capital spending.
Those underlying forces can sometimes tell you more about where an economy is heading than the headline itself.
5. We build for multiple possible futures.
This may be the most important one.
If your portfolio only works when your economic forecast is correct, you'd better be very good at forecasting.
History suggests that's a dangerous requirement.
I'd rather build around a process that acknowledges something upfront:
We're going to be wrong sometimes.
Markets will surprise us. Economies will surprise us. Politicians will definitely surprise us. The objective isn't to eliminate uncertainty. It's to build a process capable of living with it.
You Don't Have to Predict the Future to Prepare for It
There's an entire industry built around predictions.
Where will the S&P 500 finish the year?
When will the Fed cut rates?
What will inflation be?
Which technology will dominate?
What will happen in Washington?
Somebody will inevitably get the prediction right.
The harder part is knowing which somebody before it happens.
That's why I don't think prediction is one of your financial superpowers.
Your financial super powers are Purpose, Plan and Execution. You can't control the market.
You can't control interest rates.
You can't control geopolitics.
You can't control whether the next breakthrough in artificial intelligence happens tomorrow or three years from now.
But you can control the planning and execution strategies you're using to manage your money.
And when you're managing wealth you've spent decades building, I think that's a much better place to focus your energy.
Is Your Portfolio Built for What Comes Next?
The market is going to change again.
I don't know exactly how. Neither does anyone else.
But that's why Purpose, Plan, and Execution matter so much.
You need to know what you're trying to accomplish with your money. You need a plan designed to get you there. And you need an investment process capable of executing that plan when the world doesn't behave exactly the way you expected.
If your portfolio was built years ago—or you're simply not sure whether the strategy behind it still makes sense for the market we're in today, it may be worth taking another look.
If you're not currently a Luken Wealth Management client and you'd like to talk about how we manage portfolios, how our investment process works, and whether our approach might be a good fit for you, we'd be happy to have that conversation.
No predictions. No crystal ball. Just a conversation about where you are, where you want to go, and whether we can help you get there.
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