Safe haven investments can play an important role in diversifying a portfolio. By incorporating assets that are expected to retain or increase their value when the stock market goes down, you end up with a portfolio that should provide steadier, more stable returns during periods of instability. Traditional safe haven assets include cash, Treasury bonds, defensive stocks, some types of derivatives, and even certain commodities and currencies.

Lately there has been a growing buzz around cryptocurrency as a safe haven. The logic behind this is shrouded in distrust of both the government and the traditional financial system that has driven some towards speculating in “digital gold,” a moniker for Bitcoin. Ironically the government itself has decided to get in on the action and earlier this year, the Trump Administration created a Strategic Bitcoin Reserve and a Digital Asset Stockpile.  The US government aims to maximize its Bitcoin position as a unique store of value, according to the White House⁽¹⁾. With that kind of backing, Bitcoin sounds like a safe bet for a stable asset, right?

Not so fast. Unfortunately, those who went trick or treating for crypto gains this October likely came away feeling like Charlie Brown famously receiving a rock on Halloween.

Despite the hype of “Uptober” – a supposed trend where Bitcoin has only lost money in the month of October once in the last ten years – and a promising economic setup for safe haven assets due to factors including a very richly valued stock market, a softening labor market, stubborn inflation rates, a government shutdown, and renewed trade tensions with China – Bitcoin was no safe haven in October⁽²⁾. It initially moved higher on expectations of being a haven after news of the government shutdown broke, shooting up from $114,193.7 to $124,310.60 between October 1^st and October 7^th. It also quickly gave those gains back and finished the month at $109,243.20, a 12% drawdown from the peak and a loss of over 4% for the month⁽⁴⁾. That kind of short-term volatility is not consistent with a stable store of value, which informs our view that cryptocurrencies are not an effective diversifier from risky assets like stocks.

Bonds had a nice month, in contrast. The one-month total return for the US aggregate bond index was 0.61%⁽⁵⁾. Compounded monthly, that would equate to an annualized return of about 7.5%. Other safe havens such as Treasury bills and money market funds also continue to pay attractive rates compared to what they’ve been for most of the last 15 years. They may not have the glamorous “get rich quick” potential of the crypto market, but they are doing their job of providing steady returns and risk reduction to our clients’ portfolios. That’s much sweeter than ending up with a rock! 

Sources

1. https://www.whitehouse.gov/fact-sheets/2025/03/fact-sheet-president-donald-j-trump-establishes-the-strategic-bitcoin-reserve-and-u-s-digital-asset-stockpile/
2. https://finance.yahoo.com/news/red-uptober-why-bitcoin-just-144935521.html
3. https://www.cnbc.com/2025/10/01/bitcoin-rises-as-investors-seek-a-global-safe-haven-amid-shutdown.html
4. Pricing data obtained from Google Finance
5. Total return data obtained from Morningstar, using the iShares Aggregate Bond Index ETF (AGG) to represent the index

About the Author: Eric Annett

Eric is an Investment Advisor Associate for our Wealth Management Team. He has an analytical skill set and loves to take complex subject matter and make it easier for people to understand so financial matters don’t get in the way of living their best life.

Legal Disclaimer: These posts do not constitute an offer or recommendation to buy or sell any securities or instruments or to participate in any particular investment or trading strategy. They are for informational purposes only. CTW gathers its data from sources it considers reliable. However, CTW makes no express or implied warranties regarding the accuracy of this information or any opinions expressed by the author and may update or change them without prior notification.

I recently finished reading through 150 pages of compliance materials in order to sign my annual attestation. Yes, it’s required. And yes, I read it all. I even wrote some notes to send to the chief compliance officer offering feedback. It was rather exhausting.

Each compliance requirement was enacted with good intentions, but nobody has stopped to look at the big picture for a while. As my wife tells me, if everything is a priority, nothing is a priority. She might be onto something. On the days when I read 50+ pages of compliance, my brain was mush.

The same principle carries over to portfolio construction. I would venture to say that most portfolios are constructed with a cohesive purpose at first. The portfolio ought to change over time, but are changes made in the context of the overall portfolio? Or are you just adding shiny objects to an ever-growing jumbled mess? It’s human nature to gravitate towards the latter.

Here’s an example. The past few years, fund companies have been launching products that offer a less risky stock market experience. They do it in all sorts of different ways. Some use options to hedge. Some buy stocks that are historically less volatile. You can do either or both of those about a dozen different ways. Do you need a dozen different funds like that? Of course not. You might not even need one, depending on what else you have in your portfolio. It’s my job to figure out if any of them fit.

When we’re evaluating new funds, we want to be confident that they are filling in a hole or emphasizing a legitimately different opportunity, not just adding to an ever-growing mess of holdings. In doing so, we are okay passing on interesting opportunities. Interesting doesn’t mean it materially changes your portfolio.

If you look at your holdings and you can’t make sense of them, we’re here to help. We have software to analyze your current positioning, and we can give you ideas for optimizing it in a tax-efficient manner. Reach out if you’re interested.

About the Author: John O’Connor

John has more than ten years experience as an Investment Advisor. He focuses on devising and maintaining portfolios that meet individuals’ needs, investment research, and investment strategy. John has been recognized as a “FIVE STAR wealth manager” by Twin Cities Business Magazine 2016-2025. He is a CFA charterholder and CERTIFIED FINANCIAL PLANNER™ Professional.

Legal Disclaimer: These posts do not constitute an offer or recommendation to buy or sell any securities or instruments or to participate in any particular investment or trading strategy. They are for informational purposes only. CTW gathers its data from sources it considers reliable. However, CTW makes no express or implied warranties regarding the accuracy of this information or any opinions expressed by the author and may update or change them without prior notification.

It’s easy to see how sustained success can cause overconfidence. Let’s say you live in a country where the stock market index has trounced the rest of the world for two decades. I’m talking left everything in the dust, destroyed the competition, gave no mercy performance. Your country’s stock market index is up 17% per year for 20 years. The rest of the world is up a measly 7% per year.

You’d be hearing all sorts of articles of how your economy is more conducive to growth, your companies innovate better than anyone else, your management philosophy and corporate governance are superior. Your stocks dominate emerging industries. It doesn’t look like anything can stop you.

If you lived in Japan in 1989, it would be easy to see how you might throw caution to the wind and go all in on Japanese stocks. 20 years of superior performance is enough to prove sustained success, right?

Wrong. The party ended shortly thereafter. The Nikkei (Japanese) stock index lost 38% of its value in 1990. It didn’t hit a new high again until 2024. Meanwhile the rest of the world’s stocks earned 9% per year for those 24 years (MSCI World ex-Japan Index (JPY) 1/1/1990-2/1/2024).

History doesn’t repeat itself, but it often rhymes. We’re living in a world where U.S. stocks have destroyed the rest of the world for 15-20 years. Our tech companies have clobbered the competition. Our capital markets are the envy of the world.

Where do we go from here? I’m not going to say it can’t continue. I will say we’re not likely to see a repeat of the last 15-20 years. Size your investments appropriately. Global diversification is your friend.

About the Author: John O’Connor

John has more than ten years experience as an Investment Advisor. He focuses on devising and maintaining portfolios that meet individuals’ needs, investment research, and investment strategy. John has been recognized as a “FIVE STAR wealth manager” by Twin Cities Business Magazine 2016-2024. He is a CFA charterholder and CERTIFIED FINANCIAL PLANNER™ Professional.

Legal Disclaimer: These posts do not constitute an offer or recommendation to buy or sell any securities or instruments or to participate in any particular investment or trading strategy. They are for informational purposes only. CTW gathers its data from sources it considers reliable. However, CTW makes no express or implied warranties regarding the accuracy of this information or any opinions expressed by the author and may update or change them without prior notification.

I’m going to share an unpopular opinion – the vast majority of my clients do not need an alternatives fund. Wall Street is awash in new funds launched in the past decade (many in the past five years) that offer to bring exclusive investment opportunities like private credit, private equity, and private real estate to the investing masses. I’m not interested. Here are a few reasons why:

1. Most of my clients are retired and need to live on their money. They can’t afford to lock up a certain percentage that may not be accessible for years. Yes, I know many new alternatives funds offer regular liquidity, but I’m not convinced that will be available in a crisis. Low correlation doesn’t matter if I can’t get my money out.
2. The fees are too high. The least expensive options I’ve seen start with fees over 1%. They can easily be double or triple that including performance fees. That’s 10x-30x more than our average fund expense ratio today. I can’t fathom returns that would make up for that.
3. Returns in private markets vary widely. If you’re not investing with the most skilled managers, your performance will suffer. Explain to me why the best managers want to bother with thousands of individuals instead of a handful of the biggest institutions (endowments/foundations). I suspect that they don’t. I refuse to join any club that will have me as a member.

I understand why the fund companies want to offer these new funds. They are a sexy story, and they generate a lot of revenue. I can’t figure out why I should want to buy them. Until I do, I’ll leave them for others.

About the Author: John O’Connor

John has more than ten years experience as an Investment Advisor. He focuses on devising and maintaining portfolios that meet individuals’ needs, investment research, and investment strategy. John has been recognized as a “FIVE STAR wealth manager” by Twin Cities Business Magazine 2016-2024. He is a CFA charterholder and CERTIFIED FINANCIAL PLANNER™ Professional.

Legal Disclaimer: These posts do not constitute an offer or recommendation to buy or sell any securities or instruments or to participate in any particular investment or trading strategy. They are for informational purposes only. CTW gathers its data from sources it considers reliable. However, CTW makes no express or implied warranties regarding the accuracy of this information or any opinions expressed by the author and may update or change them without prior notification.

While the US stock market has been on such a long bull run with only brief interruptions, it’s become easy to forget that stocks actually do not only go up. After back-to-back years of blowout performance in 2023 and 2024, the consensus among Wall Street firms was for more of the same in 2025(2). Right out of the gate, their predictions looked astute; after opening the year at 5,868 the S&P 500 raced out to a peak of 6,144 on February 19th, a fresh all-time high(2).

And then, something changed. Stocks have since entered correction territory in the month to follow. There is no official definition of what constitutes a market correction, but most generally agree that it is when a major stock index declines by 10-15%. As of this writing, the S&P 500 has shed 10.1%, the high-flying NASDAQ has lost 13.7%, and the small company Russell 2000 is down 14%(1). Fortunately for our clients at Cherry Tree Wealth, sticking to our defined strategy has been paying off. Our client portfolios are typically down far less than these indices year-to-date, or even slightly positive.

Volatility is a normal part of investing and an occasional correction can be a healthy thing for the markets. Some selling can serve to keep valuations at reasonable levels and wipe out overly-leveraged speculators, which are both good things for long term investors and expected future returns.

Research from Dimensional summarized in the above graph shows that even positive years for the stock market are not without intra-year volatility. From 1979 to 2020, the average intra-year decline in the US stock market was 14%. Over a third of the time, there was a drop of more than 15%, and yet market returns were positive in 34 of the 41 years(3).

For those periods that do not see positive performance, there is some comfort in the knowledge that they are often short-lived. According to Schwab’s data from 1961 to 2025, the average bear market has lasted 14 months and featured an average cumulative return of -36% for the S&P. That may not be anyone’s idea of a good time, but it pales in comparison to the average bull market, which has lasted 63 months and provided an average cumulative return of 182%(4).

Anxiety is obviously running high for a lot of people during these periods of turbulence, which can make it very tempting to sell and avoid the pain of additional losses. This unfortunately is one of the biggest and most common mistakes we see people make. History shows that the market tends to rebound very quickly. By the time it is reported in the news that the market is rebounding, those sitting on the sidelines have likely already missed most of the rally.  

Big return days are unpredictable, and they are costly to miss. According to more research from Dimensional, $1,000 invested in the S&P 500 from 1990 through 2020 would have grown to $20,451 if you never touched it. If you missed the single best day of performance, your final value would drop to $18,329. If you missed the best five days, you would’ve only finished with $12,917(5). This is why we do not try to time swings in the market. Maybe we could get lucky, but we believe it is more likely to be destructive than profitable.

So, what can you do in response to wild swings in the stock market?

Times like these can present a wonderful opportunity to evaluate your investment strategy. Have you been trying too hard to chase trends? Is your portfolio sufficiently diversified across sizes, industries, and countries? Have your time horizon or goals changed? Are you over-invested in large technology stocks? Are you taking advantage of all available options to reduce your taxes?

Patience and sticking to a sound strategy are tantamount to success in investing, and working with an advisor can help you design a strategy that will give you peace of mind no matter what the S&P 500 is doing. If you find yourself overly anxious about market volatility, it may be time to review and revise your strategy.

Sources

(1): All index value data obtained from Google Finance

(2): https://finance.yahoo.com/news/wall-street-is-betting-on-a-strong-us-economy-in-2025-morning-brief-110022378.html

(3): https://www.dimensional.com/ca-en/insights/recent-market-volatility

(4): https://www.schwab.com/learn/story/market-correction-what-does-it-mean

(5): https://www.dimensional.com/us-en/insights/three-crucial-lessons-for-weathering-the-stock-markets-storm

About the Author: Eric Annett

Eric is an Investment Advisor Associate for our Wealth Management Team. He has an analytical skill set and loves to take complex subject matter and make it easier for people to understand so financial matters don’t get in the way of living their best life. Prior to joining Cherry Tree, Eric spent seven years in a variety of roles within MassMutual, most recently with one of MML’s elite advisor teams as an Investment Specialist, where his primary responsibilities included investment research, portfolio management, and trading.

Legal Disclaimer: These posts do not constitute an offer or recommendation to buy or sell any securities or instruments or to participate in any particular investment or trading strategy. They are for informational purposes only. CTW gathers its data from sources it considers reliable. However, CTW makes no express or implied warranties regarding the accuracy of this information or any opinions expressed by the author and may update or change them without prior notification.

We are now in the thick of tax season. You should have most of your documents. Now you’d better get them to your CPA so that they can meet the April 15th deadline. With that in mind, I have a few quick reminders for you today:

• 2024 IRA and Roth IRA contributions are due by April 15th. If you’re close to an income level limiting your contribution, it often makes sense to wait until you prepare your return to be sure you qualify. Just don’t forget to make the contribution.
• Qualified Charitable Distributions (QCDs) are a bit of mess when it comes to documentation. QCDs are a rapidly growing way to maximize your charitable giving by donating directly from your IRA. They count towards your required minimum distribution, but do not count as taxable income. The potential problem is the 1099R reports from the custodian do not specify that you made a QCD. You need to list it for your CPA to make sure you get credit for it. (Side note – We have software that tracks this and provide our clients with a statement showing all their QCDs.)
• Take the time to review your tax return when it’s complete. In fact, I’d love to help you do this. Reviewing how your taxes came out is the best way to see if any adjustments should be made for 2025. In addition to scanning for errors (we found at least two that required amended returns for 2023), we look for ways to achieve tax savings by smoothing out your income over your lifetime. That includes strategies to defer income in some years (IRA/HSA contributions, donor advised funds, QCDs) and recognizing income in other years (Roth conversions and/or IRA distributions). Taking a multi-year approach can produce serious savings over your lifetime.
• Remember that there are many proposals to change the tax code in 2025. We don’t know if they will be enacted for 2025 or 2026, but we are confident there will be some changes. A wait and see approach is a good idea for the first half of 2025.

About the Author: John O’Connor

John has more than ten years experience as an Investment Advisor. He focuses on devising and maintaining portfolios that meet individuals’ needs, investment research, and investment strategy. John has been recognized as a “FIVE STAR wealth manager” by Twin Cities Business Magazine 2016-2024. He is a CFA charterholder and CERTIFIED FINANCIAL PLANNER™ Professional.

Legal Disclaimer: These posts do not constitute an offer or recommendation to buy or sell any securities or instruments or to participate in any particular investment or trading strategy. They are for informational purposes only. CTW gathers its data from sources it considers reliable. However, CTW makes no express or implied warranties regarding the accuracy of this information or any opinions expressed by the author and may update or change them without prior notification.