What I tell $5M+ families about diversifying when the S&P is priced for perfection.

Short version: valuation risk is high, uncertainty is higher, so we diversify more intelligently - not by running to cash, but by broadening what we own.

Longer version:

We’re sitting in the “10” CAPE ratio bucket in the image.

Historically, that combo has meant lower returns going forward… but this time also has a very real bull case:

• AI‑driven productivity boom – We genuinely don’t know how big this gets. The last time we saw a step‑change like this (internet, personal computing), multiples stayed elevated for years because earnings caught up.

• Consumer sentiment is awful – Historically a contrarian bullish signal.

• The Fed is easing – Rate cuts expand valuations and support growth.

• Fiscal policy is extremely supportive – At least until we hit a sovereign debt crisis, which is a separate post entirely.

• Earnings growth is strong – If growth is above average, above‑average multiples are justified. Valuations can be high when profits are compounding.

So… what do you do with all this?

Same answer as always: diversify.

Not because you’re bearish, but because you’re humble.

1️⃣ Diversify within equities

Across sectors, across market caps, across geographies. Concentrated bets work… until they don’t.

2️⃣ Add a long/short overlay

Harvest style premia (value, momentum, quality, etc.) and tax alpha on top of your equity exposure. Same underlying portfolio, but higher expected return, and better risk control.

3️⃣ Diversify across asset classes

Real estate, infrastructure, hedge funds, private credit, and yes… even private equity.

For $5M+ families, that often means QP - level funds that aren’t available to the average investor.

If the thing you’re most worried about is public market valuations, then PE might actually be a better deal over the next 5 years. You can buy companies at much lower multiples, remove some of the valuation headwind, and still benefit from the same macro tailwinds I listed above.

You can’t predict the next 5 years — but you can prepare.

If you’re a $5M+ family and want a second opinion on whether your current mix reflects this environment, this is exactly what I build for clients.

The easiest way to explore it is a brief call - the booking link is in my profile.