Bahnsen: Humility means admitting we don’t know where the economy is going

Summary

David Bahnsen, CIO of The Bahnsen Group, explains why the Dow and S&P 500 are hitting record highs even with heavy geopolitical, monetary and fiscal uncertainty, arguing that macro uncertainty is a permanent feature of investing and that profits ultimately drive markets. He recommends humility in portfolio construction — asset allocation and rebalancing rather than certainty about an economic boom or bust. His stock pick is Blackstone, backed by its fee-based asset management model and private markets exposure, and he also weighs the Fed chair succession, saying markets would likely see Kevin Warsh as more independent than Kevin Hassett.

• Dow and S&P 500 are hitting new record highs despite domestic and global macro uncertainty.
• Bahnsen says macro uncertainty is a permanent condition of investing and markets move on profits.
• Profit growth can occur even amid large geopolitical, monetary and fiscal uncertainty.
• He urges humility: avoid assuming the economy will either fly or tank; use asset allocation and rebalancing.
• Blackstone is his pick: a leading fee-based asset manager with private equity, private credit, real estate and infrastructure exposure.
• He calls BX an asset-gathering machine with an attractive business model and a good entry price.
• On Fed succession, he questions whether markets would view Kevin Hassett as independent and prefers Kevin Warsh on that front.