THIS WEEK’S FOCUS

The Best Way to Diversify Your Portfolio in Uncertain Times

Let’s be real, 2024 has been throwing curveballs left and right. One minute we’re up, the next minute we’re down. It’s enough to make anyone feel like they’re trying to navigate a maze with shifting walls. And when the market feels like a giant question mark, you have to ask yourself, "Is my portfolio really built to handle this?"

If the word diversification makes you feel like you’re drowning in finance jargon, we’ve got your back. Here’s everything you need to know (without the jargon) to diversify like a pro even in these wild times.

INVESTMENT OPPORTUNITY

Strategy Spotlight: Next-Gen Data Infrastructure

The Next-Gen Data Infrastructure Thematic Investing Strategy is a carefully designed investment approach aimed at capitalizing on the increasing global demand for advanced data infrastructure technologies. This strategy focuses on companies that are at the forefront of developing and managing key infrastructure solutions, including cloud computing, data storage, data center operations, and data networking. By investing in a diversified portfolio of 20 established public companies within these sectors, the strategy aims to deliver long-term capital growth while minimizing risk through diversification.

The Trading Logic

The strategy operates using Surmount’s TradingStrategy class, which allows for a customizable and systematic approach to managing investments. It runs on a daily interval and rebalances the portfolio every 30 days to ensure allocations align with either equal-weighted or custom-weighted targets specified in the allocation dictionary. This regular rebalancing helps to keep the portfolio in line with market conditions and maintain an optimal risk-reward profile.

Why This Strategy?

This strategy works because it targets sectors poised for long-term growth, driven by ongoing digital transformation and the increasing reliance on data infrastructure. With global spending on cloud computing, data storage, and networking projected to grow significantly over the next decade, this strategy provides investors with exposure to innovative companies that are essential to the digital economy. Additionally, its systematic and flexible approach to rebalancing ensures the portfolio remains responsive to market dynamics, giving investors the potential for capital appreciation while managing risk effectively.

By focusing on companies leading the charge in data infrastructure, the Next-Gen Data Infrastructure Thematic Investing Strategy offers a compelling opportunity to invest in the future of technology and the backbone of the digital world.

DIVERSIFICATION

The Secret Sauce to a Balanced Portfolio

We’ve all heard it: “Don’t put all your eggs in one basket.” In investing, this isn’t just wise advice—it’s essential. Diversification is the practice of spreading your investments across different assets so that if one area of the market dips, your entire portfolio doesn’t go down with it. Think of it as creating an all-weather strategy that can handle market ups and downs.

The best part? You don’t need tons of cash to build a diversified portfolio. Even with a modest amount, you can start to balance risk and growth. And with automated platforms like Surmount, setting up a diversified portfolio is easier than ever. Just set your preferences, automate it, and let the system handle the rest.

Curious what a balanced, growth-focused portfolio actually looks like? Here’s a quick breakdown of a diversified, growth-heavy setup designed to boost long-term gains while keeping risks in check.

Example: A Growth-Heavy Diversified Portfolio 📈

A portfolio focused on growth but balanced for resilience might look something like this:

1. U.S. Large-Cap Growth Stocks (30%)

   • These are stocks of big, established U.S. companies with strong growth records—think Apple, Google, or Microsoft. Large-cap growth stocks offer stability along with the chance for solid returns. They’re generally industry leaders and bring reliability to your portfolio.

2. International Developed Market Stocks (15%)

   • Diversifying internationally means including stocks from established economies outside the U.S., like Europe, Japan, or Australia. International exposure not only spreads risk beyond the U.S. but also taps into growth opportunities in other parts of the world.

3. Emerging Market Stocks (10%)

   • Emerging markets, like China, India, and Brazil, bring higher growth potential but also more volatility. These stocks can add serious growth power to your portfolio, balancing out more stable assets and giving you exposure to fast-growing economies.

4. Small-Cap Stocks (10%)

   • Small-cap stocks, representing smaller companies, are known for their growth potential. They can be more volatile but offer impressive returns over time, making them a key component in a growth-heavy portfolio.

5. Real Estate Investment Trusts (REITs) (10%)

   • REITs allow you to invest in real estate without directly buying property. They offer growth and income potential and don’t always move in sync with the stock market, which adds valuable diversification.

6. Bonds (15%)

   • A mix of government and corporate bonds provides stability in your portfolio. While bonds don’t usually offer high growth, they reduce overall volatility and balance out riskier assets when the stock market dips.

7. Commodities (5%)

   • Commodities like gold, oil, or agricultural products can serve as a hedge against inflation and tend to perform differently depending on economic cycles. They add a layer of protection when stocks are struggling.

8. Cash and Cash Equivalents (5%)

   • Keeping a small portion in cash or cash equivalents (like money market funds) gives you flexibility. It’s easy to access in case you want to jump on an opportunity or need liquidity during market turbulence.

Why This Portfolio Works for Long-Term Growth

This portfolio leans into growth-focused assets like large-cap stocks, international and emerging markets, and small-cap stocks to capture market gains over time. But it’s also balanced with stabilizers like bonds, REITs, and cash to keep things steady, especially during market dips. By investing across different asset classes, you’re well-positioned to ride out market volatility without taking on excessive risk in any one area.

Building a portfolio like this helps you capture the growth potential of different markets while also reducing risk, which is key for long-term success. With automation tools, you can set up a diversified portfolio with just a few clicks and let it grow over time without constantly adjusting or micromanaging.

If you’re ready to start diversifying with ease, Surmount’s automated strategies can help you get there effortlessly—giving you a balanced portfolio that’s designed for both growth and resilience.

INVESTING IN UNCERTAIN TIMES

How to Stay Calm and Confident

We get it—the market has been a bit of a roller coaster lately, and it’s easy to feel nervous. But one of the best things you can do as an investor is to stay calm, especially when things get choppy. Market fluctuations are normal, and they don’t necessarily mean it’s time to abandon ship. Instead, try focusing on your long-term goals rather than every dip or surge you see on the news.

One of our favorite strategies for keeping cool? Dollar-cost averaging. Basically, you invest a fixed amount at regular intervals (like every month), no matter what’s going on in the market. This way, you’re buying more shares when prices are low and fewer when they’re high, which helps smooth out the ups and downs over time.

And remember, if you’re feeling a bit too tuned in, it’s okay to unplug from the financial news now and then. Stick to your plan and trust the process—this isn’t a sprint; it’s a marathon.

The Long-Game Mindset: Why Short-Term Noise Shouldn’t Distract You

When markets turn turbulent, the instinct is often to react quickly. But the truth? Short-term movements rarely matter in the bigger picture. Focusing on every little bump in the road can cloud your vision and lead to emotional decisions that derail your strategy. Instead, remind yourself that your investments are like a garden—you’re in it for the long haul, not a one-day bloom. The more you focus on your goals and avoid getting sidetracked by daily shifts, the better positioned you are for steady, sustainable growth.

It’s all about putting things in perspective: each dip isn’t a disaster but an opportunity to remind yourself why you’re investing in the first place. Keep your end goals in mind and recognize that growth happens over time, not overnight.

Dollar-Cost Averaging: A Simple Strategy for Staying Steady

One of our favorite ways to keep calm in a volatile market? Dollar-cost averaging. This strategy is all about investing a fixed amount at regular intervals, regardless of market conditions. When prices dip, you’re essentially getting more shares for your money; when prices rise, you buy fewer. Over time, this approach smooths out the ups and downs, helping you build a position without stressing over timing each purchase perfectly.

Dollar-cost averaging is especially effective in uncertain markets, taking the guesswork out of “when” to invest and letting you focus on consistency instead. It’s like planting seeds on a schedule—some days, the ground might be rough, and other days it’s rich, but in the end, it all balances out for steady growth.

Take a Break from the Noise… Seriously.

In today’s 24/7 news cycle, it’s easy to feel overwhelmed by constant updates. But being overly tuned in can actually work against you. The more you focus on every twist and turn, the more tempting it becomes to react impulsively. So, here’s a pro tip: give yourself permission to unplug. Set a limit on how often you check the markets or read financial news. If your strategy is solid, you don’t need to follow every move.

Just like you wouldn’t dig up a plant to see if it’s growing, you don’t need to check your portfolio every day. Trust the process, and know that the long-term plan you’ve set is designed to withstand the natural ebbs and flows of the market.

AVOIDING FOMO

Stick to Your Strategy, Not the Trends

FOMO, or the “fear of missing out,” is a powerful feeling—especially in the world of investing. It’s so easy to get swept up when a stock, crypto, or hot new trend starts climbing and everyone’s talking about it. But here’s the thing: chasing every buzzworthy opportunity can lead to impulsive decisions, and those can seriously derail your progress.

Instead of getting pulled into the latest hype, the real key to long-term success is trusting in the strategy you’ve set. Every smart portfolio is built to reflect your financial goals and risk tolerance, not the flashiest trend of the moment. That’s because while trends come and go, a strategy rooted in your unique goals and consistently applied over time will carry you much further.

Patience Over Panic: Why Waiting It Out is One of Your Best Assets

In a world of instant updates and social media “success” stories, patience can feel counterintuitive. But staying disciplined—especially when everyone around you is jumping from one “hot tip” to the next—is one of the strongest moves you can make. Think of it this way: investing isn’t a sprint; it’s more like planting seeds. Some may bloom fast, but the ones with deep roots are the ones that truly last.

Sure, you might miss out on the thrill of a quick win, but quick wins often come with high risks. Sticking to your plan helps you stay grounded and focused on what really matters: building wealth over the long haul, without risking it all for short-lived gains.

How to Stick to Your Strategy When Temptation Strikes

It’s one thing to say you’ll stay disciplined, but actually doing it when excitement is in the air? That’s where things get tough. Here are a few simple ways to stay on course:

• Focus on Your Long-Term Goals: Whenever FOMO hits, remember why you’re investing in the first place. A strong portfolio is built around your personal financial goals—not the latest market craze. Revisit your goals and remind yourself that your strategy is built to get you there.

• Limit Your Social Media & News Exposure: Constantly watching the financial news or seeing success stories on social media can be overwhelming. Consider setting boundaries around how much time you spend consuming market “hot takes.” Sometimes, a little distance makes it easier to stick to your plan.

• Automate Your Investments: When your investments are automated, you’re less tempted to constantly adjust them based on the latest trends. Automation keeps you disciplined and allows you to stick to your dollar-cost averaging or regular contribution plan without second-guessing yourself.

Why Consistency Beats Chasing Trends, Every Time

One of the biggest truths about investing is that consistency pays off more than chasing returns. Market trends can be incredibly alluring, but they’re often unpredictable and short-lived. By sticking with a steady, reliable approach, you’re building a portfolio that’s designed to grow sustainably, not one that’s dependent on the latest fad to stay afloat.

In the end, FOMO is natural, but learning to manage it is what separates successful investors from everyone else. When you build a strategy and stay committed, you’re not just investing money—you’re investing in your future stability, peace of mind, and financial success. The bottom line? Trends fade, but a well-executed plan stands the test of time.

COMPOUND INTEREST

The Perks of Starting Early

You’ve probably heard about compound interest, but here’s why it’s actually a game-changer: it’s all about earning returns on top of returns. The sooner you start, even with small amounts, the more time your money has to grow. It’s like planting a tree—the earlier you plant it, the more it grows. Even if you’re only able to invest a bit at first, compound interest can add up over the years.

If you’re just getting started, this is your reminder to get in the game now. The longer you wait, the more you’re leaving on the table.

SMART MONEY HABITS FOR EVERY INVESTOR

Building a Foundation Beyond Stocks

Let’s get real—investing is a powerful tool for building wealth, but if your overall financial foundation isn’t solid, you’re building on shaky ground. Sure, buying stocks and growing your portfolio is exciting, but sustainable financial success starts with smart, consistent money habits. These habits are like the undercurrent that drives your long-term growth, helping you weather market swings and stay on track to reach your goals. So let’s break down why mastering these essentials can make or break your investment journey.

1. Build an Emergency Fund First – Your Safety Net for the Unexpected

An emergency fund might not sound thrilling, but it’s absolutely crucial. This is your buffer—the money that’ll keep you from having to dip into your investments or rack up credit card debt if life throws you a curveball. Think about it this way: markets can fluctuate, but life’s surprises are certain. Medical bills, car repairs, or sudden job changes happen, and having an emergency fund means you can handle them without touching your investments.

Aim to save three to six months' worth of expenses. Keep it somewhere accessible, like a high-yield savings account, where it’s safe and separate from your investments. This safety net isn’t just financial protection; it’s peace of mind, letting you invest with confidence rather than fear.

2. Tackle High-Interest Debt – One of the Best ‘Investments’ You Can Make

Before jumping deep into investments, focus on paying off any high-interest debt—credit cards, personal loans, etc. Why? Because no investment can guarantee returns as high as the interest rates on most consumer debt. Imagine you’re carrying a credit card balance with a 20% interest rate. By paying it off, you’re effectively “earning” a 20% return—risk-free. That’s a no-brainer win in the personal finance game.

Once high-interest debt is under control, you’re not only freeing up cash flow for investing, but you’re also gaining more flexibility and reducing financial stress. You’ll be amazed at how much more power you have to save and invest when you’re not constantly losing ground to debt.

3. Budget Like a Pro – Your Blueprint for Building Wealth

Budgeting isn’t just about knowing where your money goes—it’s a game plan for your financial future. A well-thought-out budget ensures you’re consistently setting aside money for investing, saving, and your day-to-day needs. Start by tracking your spending, then align it with your financial goals. The goal here isn’t to restrict yourself but to make sure you’re spending intentionally.

One of the best budgeting hacks? Automate it. Set up automatic transfers to your investment and savings accounts, so you’re prioritizing your goals without even thinking about it. A budget helps you avoid the “I’ll invest what’s left over” mindset and puts you in a position to build wealth with every paycheck.

4. Invest in Financial Education – Because Knowledge Compounds, Too

Investing in yourself is just as important as investing in the market. The more you understand about personal finance, investing strategies, and market trends, the better equipped you are to make decisions that align with your goals. This doesn’t mean you need to become a Wall Street pro, but a foundation of financial literacy helps you spot opportunities, avoid costly mistakes, and stay calm during market shifts.

Books, podcasts, online courses, and even the Surmount newsletter (hey, you’re already here!) are great starting points. The goal? Build confidence in your ability to make sound financial choices. Knowledge compounds, just like interest—and the sooner you start learning, the stronger your financial base will be.

Why These Habits Are Game-Changers for Long-Term Growth 🚀

By focusing on smart money habits alongside your investments, you’re setting yourself up for sustainable wealth. These fundamentals ensure you’re investing from a place of strength, not necessity. When your foundation is solid (emergency fund set, debt in check, budget on point, and financial knowledge growing) you can approach the market with a clear mind and a focused strategy.

RECOMMENDED READING

"Principles” by Ray Dalio 📚

A powerful read for anyone seeking to build resilience, not just in investing but in decision-making and life overall. Ray Dalio, the founder of Bridgewater Associates (one of the most successful hedge funds in the world), shares a set of guiding principles that he developed over decades of running his firm and navigating financial markets.

Dalio’s core idea is to embrace reality head-on, even when it’s uncomfortable, which helps investors stay objective and data-driven during volatile times. He emphasizes understanding the market through a “machine” metaphor—seeing it as a system of interconnected parts. This helps investors anticipate changes and adapt effectively.

Dalio also highlights smart decision-making by gathering data, consulting experts, and being open to changing your mind based on new information. When it comes to diversification, Dalio champions what he calls the “Holy Grail of Investing”—holding 15 or more uncorrelated investments to reduce risk without sacrificing returns. Finally, he underscores the importance of learning from mistakes. By encouraging self-reflection and adaptability, Dalio provides a clear framework for maintaining composure and improving your approach, both in investing and in life.