Today’s market environment is uncertain and volatile. Sound familiar?
Just over a year ago, in our February 2025 newsletter, we wrote about balancing risks and opportunities amid an alarming stream of economic data, inflation concerns, and shifting expectations around Federal Reserve policy and interest rates. At the time, the headlines were different, but what we were seeing in the market was much the same: uncertainty around growth, questions about inflation, and markets reacting to new information in real time.
The more things change, the more they remain the same.
Today, tensions in the Middle East, energy price volatility, and renewed inflation concerns have moved back into focus. As a result, market volatility has picked up again. The day-to-day changes can feel more pronounced—and exhausting. But at its core, the environment we are navigating today is nothing new. It’s another example of markets doing what they have always done: absorbing new information, repricing risk, and creating both challenges and opportunities.
At Leisure Capital Management, how we manage our portfolios in the face of these challenges is the same as it was when we opened our doors in 2002. Rather than watching headlines and trends, we are focused on identifying what adjustments, if any, are needed to protect our clients’ portfolios, as well as where volatility is creating opportunity for future growth.
Importantly, what we are not doing is simply reacting to changes in the market. Rather, we are adjusting to fit the current environment. The words may feel similar, but as investors, it’s important to recognize the distinction between the two actions:
Reactive changes are typically driven by short-term developments. They follow headlines, respond to market swings, and tend to prioritize immediate comfort over long-term outcomes. While they can feel productive in the moment, they rarely add lasting value.
Strategic adjustments are grounded in a disciplined investment process. They are driven by key factors such as valuation and fundamentals, and they’re aligned with the investor’s long-term objectives. They recognize that while markets may be volatile in the short term, the principles that drive long-term returns remain consistent.
This has been a core part of our philosophy whether we are navigating inflation concerns, interest rate cycles, a global pandemic, or geopolitical uncertainty. It is what guided our thinking in 2002, in 2025, and today.
Our process in action…
Regardless of the reasons driving it, periods of high volatility are when the process of making strategic adjustments becomes especially important. Here’s where we believe volatility may be creating more attractive long-term entry points across asset classes:
Equities:
Within equities, volatility is creating greater disparities between company performance and current valuations. To take advantage of that reality, we are focused on high-quality businesses with strong balance sheets, durable cash flows, and the ability to adapt to changing conditions. Companies with pricing power, operational flexibility, and strong financial positions are generally better positioned to navigate rising input costs and maintain margins.
At the same time, we see opportunities in companies whose long-term outlook remains intact, but whose valuations have been affected by recent market trends. Identifying these opportunities requires discipline and a focus on fundamentals.
Credit:
Credit markets look much more compelling today than they have in recent years. As interest rates and spreads have adjusted higher, yields across many areas of fixed income are beginning to look attractive again, opening the door to potential income generation within our diversified portfolios.
Not all areas of the credit market are performing the same, making careful selection especially important. We are focused on areas where investors are being appropriately compensated for risk, with an emphasis on borrowers with strong fundamentals, manageable levels of debt, and structures designed to help limit downside risk. We are remaining cautious in segments where risk may not yet be fully reflected in pricing, particularly in more economically sensitive or highly leveraged areas.
Alternatives:
Alternative investments continue to play an important role in our portfolio construction. Their ability to provide return streams that are less directly correlated with public markets can help diversify outcomes across market environments.
Within alternatives, we are seeing opportunities in strategies supported by longer-term structural trends, rather than those dependent on short-term market direction. This includes assets held in our LCM Alternatives Collection, and strategies designed to capitalize on dislocations or generate income. As always, we take care to evaluate how each strategy may perform in different conditions and, importantly, how it fits as part of each overall portfolio.
To learn more about how we apply alternatives to support diversification, read The LCM Guide to Alternative Investments.
A consistent approach in a changing market…
When markets feel unsettled, we rely on an approach designed to support both growth and protection over time. Rather than reacting to others’ predictions or short-term fears, we focus on identifying where portfolios can be strengthened and where opportunities may support long-term outcomes.
Our decisions are grounded in fundamentals, not headlines. No matter how conditions evolve, we remain committed to a disciplined process and a long-term perspective. As always, if you have any questions about your portfolio or the current market environment, we encourage you to reach out. We are always here to help.
