Sep 18, 2025

min read

💬 Daily Observation

“Most investors chase returns like dogs chase cars, they don’t know what to do when they catch them.” — Leon Black

My neighbor once told me he jumped into a hype stock, rode it up 60%, and then froze, unsure whether to sell or hold. That moment stuck with him. Chasing returns without a framework leads to reaction, not resilience. Long-term investors know it’s not about catching the car, it’s about staying on the road.

☕ Let’s dive in today’s fresh edition of Diversification Daily.

🗞️ Today's stories that matter (and why)

1. 🏦 Fed cuts rates, signals more ahead

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The Federal Reserve lowered its benchmark rate by 0.25 percentage points to 4.00 – 4.25% and hinted at additional cuts because unemployment is creeping higher and job creation is below break‑even levels.

Fed Chair Jerome Powell said there is no risk‑free path and policymakers must balance inflation against employment. New governor Stephen Miran dissented, favoring a bigger cut, and projections show inflation near 3% and unemployment around 4.5% by year‑end.

Why it matters: A measured easing cycle suggests borrowing costs may keep drifting lower, offering relief to debt‑laden households and small firms but also signalling the Fed sees economic weakness.

Assets in Focus: Fixed Income

2. 📉 Jobless claims retreat after spike

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The US Labor Department reported that initial unemployment claims fell by 33,000 to 231,000 for the week ending Sept. 13, reversing the prior week’s surge.

The four‑week moving average dipped to 240,000 - while continuing claims fell to 1.920 million and the insured unemployment rate held at 1.3%. The report noted that both demand for and supply of workers are cooling.

Why it matters: A cooling labour market reduces wage pressure and gives the Fed cover to keep easing. Falling claims after a brief spike suggest layoffs remain contained but hiring momentum is fading.

Assets in Focus: Fixed Income

3. ⚛ Nuclear power’s trillion-dollar opportunity

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Bank of America analysts estimate that nuclear energy represents a $10 trillion market opportunity and could help solve global power shortages.

To meet rising electrification demands from data centres and AI projects, nuclear capacity would need to triple by 2050, requiring about $3 trillion in investment over the next 25 years.

The report highlights small modular reactors as a key technology and notes that companies like NuScale Power and Oklo plan to bring SMRs to market later this decade.

Why it matters: Nuclear power’s resurgence underscores the scale of investment needed to decarbonise electricity. For investors, it positions uranium miners, reactor builders and related ETFs as potential beneficiaries of long‑term infrastructure spending.

Assets in Focus: Equities

4. 🏠 Homeowners rush to refinance as rates tumble

A Dow Jones report via Morningstar/MarketWatch noted that demand for adjustable‑rate mortgages surged 25% in one week, reaching a three‑year high, as buyers capitalised on falling mortgage rates.

The 30‑year fixed mortgage rate fell 10 basis points to its lowest level since Marchmorningstar.com, spurring a wave of refinancing. Industry data showed homeowners quickly pivoting toward cheaper adjustable loans to lock in savings.

Why it matters: Lower borrowing costs can revive housing activity, but the boom in adjustable‑rate mortgages is a reminder that consumers may be taking on rate‑reset risk. Real estate investors should watch how refinancing waves affect demand and home prices.

Assets in Focus: Real Estate

5. 📊 Rate-sensitive sectors in focus

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With the Fed cutting rates, small‑cap stocks (Russell 2000) have rallied over 5% since late August as lower borrowing costs help companies reliant on external funding. Regional banks gained about 1.4%, though their margins hinge on deposit costs and the yield curve.

Growth stocks are up more than 17% this year thanks to the AI boom, while utilities have climbed about 10% since last year’s first cut but historically lag during easing cycles. Homebuilders have slipped roughly 3% since the first cut as high mortgage rates strain demand, whereas consumer discretionary names have surged around 26%.

Why it matters: Shifting rate expectations don’t impact all equities equally. Understanding which sectors gain (growth, consumer discretionary) and which struggle (banks, homebuilders) helps investors rebalance risk.

Assets in Focus: Equities

🌀 Diversification Score – Have you evaluated your portfolio's diversification?

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🤯 Alternative investment highlight: 🚀 Space‑Flown Coins Fetch Astronomical Prices

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On Sept. 12, 2025, Stack’s Bowers auctioned seven 22‑karat gold Sacagawea dollars that had flown aboard NASA’s shuttle Columbia in 1999. These coins were originally minted to promote the golden dollar and celebrate Eileen Collins as the first woman to command a US space mission.

During the auction, two of the space‑flown coins fetched bids of $550,001 each, while other lots from the same series sold for $380,001 to $500,001, bringing the total to roughly $3.16 million. Only five other space‑flown Sacagawea coins exist and they remain in the US Mint’s collection

These coins are the only US currency ever struck specifically for spaceflight, making them a quirky blend of numismatic rarity and space memorabilia. Collectors are drawn to them not for financial returns, but for the bragging rights of owning money that orbited Earth and for the slice of history they represent.

🧠 From the Education Center: How much of the wealth divide comes down to Tax Policy?

Examining the real drivers of inequality—tax law, asset ownership, and structural forces.🔗Learn more

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