3rd Quarter 2026

As many of you know, my daughter Cassidy plays competitive softball and currently plays on a travel ball team based out of Castro Valley. Almost every weekend we load the car with softball gear, folding chairs, canopies, food and plenty of water, before heading out to tournaments that are often several hours away from home. The travel team is comprised of many talented girls, each skilled in their respective positions. The pitchers pitch, the catchers catch, the infielders defend the infield, and the outfielders cover the outfield. No single player is expected to do everything. The team succeeds because each girl contributes in the role they can make the greatest impact.

This past weekend the team had a tournament in Stockton. Unfortunately, not all the players were available, so some girls stepped into unfamiliar positions. They played hard, but mistakes that naturally come with playing out of position proved costly in a close game. 

Successful softball teams aren’t built by asking every player to play every position. They’re built by putting each player where they have the best opportunity to succeed. Successful portfolios are built the same way. We don’t expect one investment to do everything. Instead, we combine investments with different strengths so that each serves a purpose within the overall portfolio. This is called diversification. Each asset plays a specific role and works individually for the benefit of the whole. Examples include income, growth, value, tax efficiency and capital preservation investments.

Predicting which sector will lead the market next is incredibly difficult. History has shown that leadership changes quickly. One year it’s technology, another year it may be energy, healthcare or financials. There is a temptation to want to invest in the hot stock or hot sector and load up your portfolio with it. This would be the equivalent of putting all your outfielders in both the outfield and the infield. This will not work. This is why diversification can work well. It gives you exposure to a bunch of sectors which over time gives your portfolio the potential for growth. So, how do we achieve this goal?

We invest portfolios in what we call the core and satellite approach. Think of it like earth and the satellites orbiting above it. The earth represents your core holdings of diversified mutual funds and exchange traded funds (ETF’s), and your satellites are your individual stock, bond or cash positions. The core mutual funds and ETF’s hold a variety of diversified investments in them including growth, value, income stocks, multi-sector bonds, real estate and cash. We select which ones go into your portfolio based on your portfolio objectives, and we rarely change these core holdings. The satellites are made up of individual stocks, bonds or cash investments that we use to seek additional sources of return within the portfolio. As an example, if you have a conservative portfolio, we may invest in treasury bills as satellites within the portfolio. If you have an income portfolio, we may invest in individual real estate investment trusts to provide an additional source of income. If you have a growth portfolio, we may invest in a newly public company that aligns with the portfolio growth objective. Each portfolio we create is comprised of investments that we believe are appropriate for the portfolio's objectives and offer potential for growth, just like how the softball team is looking for the best players at their position that will give the team the best opportunity to win.

Thank you for continuing to put your trust in our firm. We truly appreciate it. We hope you have a wonderful second half of the year.

A diversified portfolio does not assure a profit or protect against loss in a declining market.
Before investing in ETFs and mutual funds, investors should carefully consider a fund's investment objectives, risks, charges and expenses.  Fund prospectuses contain this and other information and may be obtained by asking your financial advisor.  Read prospectuses carefully before investing.