June 26, 2025
4
min read
💬 Daily Observation
“The stock market is a device for transferring money from the impatient to the patient.”
— Warren Buffett
Some investors react to every market swing, trading frequently and accumulating transaction costs, tax impacts and emotional fatigue—only to discover that reactionary moves may erode returns over time.
One retiree* shifted from weekly trading to a simple, set-and-forget allocation: automatic contributions to a broad equity index and biannual rebalances. Over several years, her account grew more steadily, drawdowns felt smaller, and she regained confidence in a process untethered from daily market noise.
Patience is an active discipline. By staying invested through volatility, an investor captures the full power of compounding, reduces frictional costs, and avoids the trap of mistimed exits.
Is impatience costing you potential gains?
☕ So grab your coffee, and let’s dive in today’s fresh edition of Diversification Daily.
🗞️ Today's stories that matter (and why)
1. 💵 Dollar Plunges as Trump Pummels Powell
The US dollar index fell to its weakest level in over three years after President Trump’s comments on replacing Fed Chair Jerome Powell stoked fears about central bank independence. The slide accelerated with the index down more than 10% in 2025, weighing on two- and ten-year Treasury yields as markets repriced rate-cut bets. Meanwhile, the euro climbed above $1.17 and sterling reached its strongest point since 2021 as investors sought alternatives to the softening dollar.
Why it matters: A softer dollar helps US exporters but raises import costs and complicates Fed policy amid political pressure.
Assets in focus: Currencies
2. 🛍️ UK Retail Sales Tumble in June, Outlook Darkens for July
According to the Confederation of British Industry’s June survey, the retail sales balance plunged to –46 from –27 in May, marking the steepest drop in sentiment since early 2024. Retailers’ expectations for July slid further, with the forecast balance falling to –49, its weakest reading since the pandemic began. The downturn reflects persistent cost-of-living pressures and weak wage growth, which have curbed consumer spending and left many brick-and-mortar outlets struggling to regain momentum.
Why it matters: A sharp decline in retail sentiment typically precedes real-world sales weakness, signaling potential headwinds for consumer-discretionary stocks and broader economic growth.
Assets in focus: Equities
3. 🏘️ US Pending Home Sales Rise More Than Expected in May
Pending home sales climbed 1.8% to a 72.6 index reading in May, well above economists’ forecast of a 0.1% increase. Contracts improved across all four US regions and were up 1.1% year-on-year. Lawrence Yun, chief economist at the NAR, said steady job gains and rising wages are bolstering the market, though fluctuations in mortgage rates remain the primary driver of homebuying decisions and affordability.
Why it matters: A sharper-than-expected rebound suggests the housing market may be stabilizing, but persistent rate volatility still poses a headwind for buyers and mortgage-sensitive assets.
Assets in focus: Real Estate
4. 🏠 Hong Kong Home Prices Plateau in May Amid Sluggish Demand
Hong Kong’s private home prices edged up just 0.03% in May after a 0.5% increase in April, ending a four-month decline. Prices are down 0.9% year-to-date, their lowest comparable level since 2016. Government measures—such as easing down-payment rules and lifting purchase restrictions—have yet to meaningfully boost demand, though a dip in the one-month HIBOR has slightly improved mortgage affordability.
Why it matters: Housing markets can stall under high financing costs and policy uncertainty—an alert for investors to monitor interest-rate and geopolitical shifts closely.
Assets in focus: Real Estate
5. 🤖 Futures Near Peak as Microsoft and Nvidia Set Record Highs
S&P 500 futures rose 0.4%, with Nasdaq 100 +0.5% and Dow Jones +0.3%, as easing geopolitical tensions and Fed-chair speculation buoyed markets. Nvidia overtook Microsoft as the world’s most valuable company at a $3.77 trillion market cap, while Micron rallied after forecasting AI-driven data-center revenue growth.
Why it matters: Tech leadership and robust futures point to equity resilience—but today’s economic releases could reset sentiment.
Assets in focus: Equities
🌀 Diversification Score – Have you evaluated your portfolio's diversification?
Are you spread across the right risk factors—or leaning on just a few big bets?
📊 Market Movements Snapshot
Asset Classes:
- 🟢 US Growth Equities (NASDAQ): +5.53% YTD. A surge in semiconductor earnings and AI-data-centre demand powered broad gains across growth stocks. A dovish Fed outlook and easing geopolitical strains further encouraged risk-on positioning in the tech sector.
- 🟢 Emerging Markets Equities: +10.23% YTD. A softer dollar and attractive valuations drew fresh inflows into emerging-market shares. Optimism around trade policy and expected rate cuts in key economies underpinned the rally.
For the full list, click here
Sectors:
- 🟢 Communication Services: +6.92% YTD. Strong results from digital-ad leaders and AI-enhanced targeting drove sector outperformance. Continued investor faith in online advertising growth sustained the momentum.
- 🔴 Health Care: -3.58% YTD. Defensive health names lagged as markets rotated into higher-beta, growth-oriented assets. Profit warnings and M&A setbacks weighed on pharma and medtech sentiment.
For the full list, click here
🤯 Alternative investment highlight: Groundwater Gold Rush: Trading H₂O Rights 💧
Across drought-prone regions from the American Southwest to Australia, billionaires and private-equity firms are quietly acquiring land not for crops but for the groundwater rights it carries—paying up to hundreds of thousands of dollars per acre-foot in wagers that water scarcity will make these entitlements as coveted as any tech stock.
Investors target parcels sitting atop major aquifers—Colorado River allocations in Arizona, Santa Cruz Basin rights in California, and Murray–Darling entitlements in Australia—snapping them up to control the legal permission to pump water rather than the surface land itself.In 2013–14, MassMutual-backed Greenstone Resource Partners paid nearly $10 million for 2,000 acre-feet of Colorado River water tied to 500 acres of farmland in Cibola, Arizona.
Water rights in Western US states follow “prior appropriation”: whoever first diverts and beneficially uses water holds senior claims, which can be bought, sold, and leased under state rules. Private firms register these rights with local water boards, then lease or trade the volume to cities, farms, or bottled-water operations during dry spells—often at multiples of the original purchase price.
Treating water as a tradeable commodity shifts a lifeline resource into financial markets, with real-world stakes: communities may face higher rates or shortages if rights are diverted elsewhere. Yet proponents argue that market mechanisms can allocate water more efficiently, funding infrastructure upgrades and environmental flows where governments fall short.
🧠 From the Education Center: Diversification, a Practical Guide
Diversification is powerful—but only when it’s done right. Learn how to spread risk smartly across assets, geographies, and time.
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