2025 Annual Client Letter

Capital Markets

As I wrote to you last quarter, 2025 had the makings of a banner year for capital markets.  And for the first time in a meaningful way since Resilient Asset Management's founding, international equity markets far out-shined their domestic counterparts.  You should know that I made no prediction about this performance - rather, I remind you about my emphasis on diversification in all your portfolios.  Diversification trumps prognostication over the long term....and most other terms.

Will there be a repeat in 2026?  I have no idea....and neither does anyone else with actionable certainty.  The prudent thing to do is to remain diversified, play the long game, and let the capital markets work for you.

Uncertainty

When I started in this profession some years back, one of the more interesting things I heard from Clients was the word "uncertainty".  More specifically, several prospective Clients - citing current "Uncertainty" - wanted to "wait until the bottom fell out of the market" to "jump back in".  There are a few principles to unpack from such logic.

First - uncertainty.  Some talk about the present - meaning today - as if uncertainty about the future is something new.  Some folks harken back to the days of "yesteryear" where, seemingly, the future was both well-understood, in sharp focus, and predictable.  I can tell you, this viewpoint is 100% false and is an illustration of the "Rosy Retrospection" bias.

Any thoughtful analysis of the past undoubtedly leads to realizing uncertainty was indeed ever-present.  For anyone who thought the 1920s were it, that decade had The Great Depression; in the 1930s we endured the start of World War II; in the 1940s the world was introduced to Atomic Weapons....you get the idea.  The future - unfortunately - resides beyond a mud-stained windshield....accepting this is absolutely necessary for long-term investors.

Second - our evolutionary survival instinct.  As homo sapiens evolved, we were on many carnivores' menu.  Therefore, extreme apprehension about one's surroundings was essential for survival and undoubtedly contributed to our evolutionary win.  The other species who looked like us, though lacking our apprehensions and fears, are fossilized somewhere.

This innate fear we all have about both unfamiliar surroundings and the accompanying uncertainty are other psychological biases we have to both acknowledge, and as much as we can, control.

Third and last is the media.  Unless you search a good bit, finding heartwarming, uplifting stories is exceedingly difficult.  Rather, the mainstream media feeds us a steady diet of doom, gloom, red asphalt, and all things mostly bad in between.  You may be familiar with the phrase, "If it bleeds, it leads".  Over-consumption of these types of stories can seriously distort one's optimism about the future.  So again, forced regulation is advised.

At the end of the day, despite what we may read (or watch) about the calamity lying in wait, from every point in the past our world, and especially the United States, has prospered in a near-continuous way.  Please keep this in mind if you ever consider the present circumstances overly "uncertain".

Artificial Intelligence

By now, most of you are probably familiar - in at least a limited way - with an AI Large Language Model (LLM).  To name a few:  ChatGPT, Gemini, Anthropic, Grok, and Co-Pilot.  And there are probably many of you who have had the "a-ha" AI moment where your favorite AI LLM solved a problem, provided an insight, or otherwise wowed you.

Market observers may have noticed the AI-theme permeating certain sectors of the stock market.  Realizing the newsworthiness of this phenomena, financial pundits have piled into the discussion surrounding AI's impact on society, the labor market, and just about everything else.

For me, I have read several viewpoints ranging from ALL white collar jobs being rendered obsolete to AI being simply another technology tool.  Where the truth lies - while I have no concrete idea of how things will land - is likely somewhere in that range, which is admittedly an exceedingly wide chasm.

I will share one interesting tidbit I read, which related to an AI-related start-up in the venture capital space that illustrates how novel technologies spawn some peculiar situations - such as the following:

"Thinking Machines, an AI startup helmed by Open AI Executive Mira Murati, just raised the largest seed round in history:  $2 Billion in funding at a $10 Billion valuation.  The company has not released a product and has refused to tell investors what they're even trying to build." [SOURCE]

What all of this means for investing prospects is an open question.  Rather than spending time predicting market direction, we will remain vigilant observers of capital markets and focus onethe things we can directly influence, which for each of you means addressing your Estate Plans, reviewing your Risk posture, assisting with your Tax planning, encouraging meaningful savings, and monitoring your investment accounts for alignment with your Investment Policy Statements.

End of an Era

Most of you are probably aware that Warren Buffett stepped down as the CEO of Berkshire Hathaway at the end of 2025.  I was at the Berkshire Hathaway Annual Meeting where he announced he was stepping down....I equate the experience to those who were at Yankee Stadium when Lou Gehrig made his famous speech.  To try and put into words the impact Warren Buffett has had on my life would require much more space than any of you would likely want to endure.  For now, it's safe to say I would not be anywhere near the investor or business person I am - limited as my skills may be - without the near constant observation of The Oracle of Omaha over the past 25 years.  Inasmuch as someone I have never personally met could have an impact on my life, I owe Mr. Buffett an extreme debt of gratitude - thank you, sir.  Maybe someday a more extensive article is in order.

Conclusion

I want to repeat my many thanks to all of you for being a part of Resilient Asset Management.  A mere nine years ago, I had no experience and there were no Clients and no revenue.  None of the subsequent growth would have happened if not for all the individuals reading this letter.  Very simply put, thank you.