July 15, 2025
4
min read
💬 Daily Observation
“Diversification is not just a strategy, it’s a necessity.” – Charlie Munger
We talk about diversification often and today we brought in Charlie Munger, vice chairman of Berkshire Hathaway and one of the sharpest value investors alive.
Munger underscores that by intentionally blending uncorrelated holdings you can smooth returns, protect capital and avoid the gut-wrench of watching a single allocation dominate your results.
☕️ So grab your coffee and let’s dive into today’s fresh edition of Diversification Daily.
🗞️ Today's stories that matter (and why)
1. 🏷️ US consumer prices tick up 0.3% in June as tariffs kick in
According to the US Labor Department’s Consumer Price Index report, headline CPI climbed 0.3% month-over-month in June, the largest gain since January, driven by rebounding gasoline prices and higher costs for tariff-affected goods as businesses ran down pre-tariff inventories.
Core CPI, which excludes food and energy, also rose 0.3%, led by pricier furniture and recreational items, bringing the 12-month CPI increase to 2.7% and core CPI to 3.0%.
With new tariffs on imports from Mexico, Canada, and the European Union scheduled for August 1, further upward pressure on goods prices is expected, even as modest service-sector inflation and subdued demand temper overall gains.
Why it matters: Tariff-driven cost increases in everyday goods are adding to underlying inflation, which could delay Federal Reserve rate cuts and keep borrowing costs higher for longer.
Assets in focus: Fixed Income
2. 🤖 Nvidia shares surge as US approves H20 AI chip sales to China
Nvidia shares jumped 3.5% in morning trading after the US government signaled it would grant export licenses for its H20 AI GPUs, clearing the way to resume sales to Chinese customers.
CEO Jensen Huang’s recent meetings in Washington helped reverse curbs that had cost Nvidia an estimated $15 billion in revenue and led to a $5.5 billion write-off of unsold inventory. Chinese tech giants such as ByteDance and Tencent are already submitting orders, and Nvidia is preparing its RTX Pro GPU to comply with ongoing restrictions.
Why it matters: Restoring access to China, a market that generated approximately $17 billion (13%) of Nvidia’s total 2024 sales, could reverse much of the lost revenue, underpin future AI-driven growth, and highlight the strategic importance of political engagement in tech supply chains.
Assets in focus: Equities
3. 🇨🇳 China’s Q2 GDP growth comes in at 5.2%, below expectations
Official data show China’s economy expanded 5.2% year-on-year in Q2 2025, down from 5.4% in Q1 and shy of the 5.3% consensus, as weak domestic demand and property-sector headwinds outweighed stronger exports amid tariff uncertainty.
Retail sales growth also cooled to 3.5% YoY and fixed-asset investment rose just 5.6%, underscoring uneven post-pandemic recovery and reliance on policy stimulus.
Why it matters: China’s growth slowdown ripples through global supply chains and commodity markets, denting raw-materials demand and weighing on emerging-market equities, while loose Chinese monetary and fiscal policy may offer a partial offset.
Assets in focus: Equities
4. 🏠 US housing market flashes warning as high rates stifle demand
Moody’s Analytics chief economist Mark Zandi warns that persistently high mortgage rates, near 7% for a 30-year fixed, have throttled home-buying and building, with sluggish sales, rising inventories and falling prices in many regions forcing builders to delay projects and scrap incentives.
He notes that without a material drop in borrowing costs, housing could become a significant drag on GDP growth, with Goldman Sachs now forecasting only 0.5% home-price gains in 2025 and 1.2% in 2026, down sharply from earlier projections.
Assets in focus: Real Estate
5. ₿ Bitcoin pulls back to $117 K after record high
On July 15, Bitcoin briefly reached an all-time high of $123,091 before slipping 4.6% to trade around $117,466 amid profit-booking and market consolidation. The broader crypto market felt the chill, with major altcoins like Ether and XRP falling between 2%–4% on the same profit-taking wave.
Despite the pullback, US spot Bitcoin ETFs logged over $1 billion in inflows on July 10, pushing year-to-date ETF investments above $15 billion and signaling sustained institutional conviction.
Why it matters: Crypto’s sharp swings highlight the need for risk-managed allocation within alternatives. While institutional inflows underpin a positive medium-term outlook, near-term volatility can disrupt unhedged portfolios.
Assets in focus: Alternatives
🌀 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:
- 🟢 Developed Market Equities: +16.30% YTD. European and Japanese stocks have rallied on stronger-than-expected corporate earnings, a weaker dollar boosting overseas returns, and renewed Chinese stimulus lifting regional export names.
- 🟢 US Bonds: +3.10 YTD. Continued Fed rate-pause expectations, solid safe-haven demand around global uncertainties, and softer inflation data have kept Treasury yields from rising further, underpinning a roughly 3.1% return.
For the full list, click here
Sectors:
- 🟢 Financials: +9.12% YTD. A steeper yield curve and healthy bank earnings have driven financial shares higher, as net-interest-margin tailwinds offset credit-quality worries.
- 🟢 Consumer Discretionary: +4.49% YTD. Robust retail sales, strong tourism and leisure spending over the summer, and healthy consumer-confidence readings have supported retailers and travel-related stocks.
For the full list, click here
🤯 Alternative investment highlight: ⏳ Life-settlement funds bet on longevity, exposing investors to human-lifespan risk
A growing number of high-net-worth investors are buying life-insurance policies from seniors, known as “life settlements,” at deep discounts, then packaging them into funds with yields north of 8%. In one example, a 2025-vintage fund bought policies with an aggregate face value of $600 million for just $180 million in premiums, targeting an internal rate of return above 12 percent as policyholders age out.
These funds lock in contracts where the investor pays ongoing premiums until the insured passes away, at which point they collect the full death benefit. Longevity risk is real, as policyholders living longer than expected can delay returns by years, yet the asset’s low correlation with stocks and bonds makes it a compelling diversifier in a turbulent market.
Unlike stocks or real estate, life settlements hinge on human lifespans. Their opaque valuation and longevity risk underscore the operational, and ethical, complexities lurking in “alternative” allocations, reminding investors that even the most tangible-sounding assets carry hidden risks.
🧠 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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