Introduction
As the leaves change color and fall, John Bird, our CEO, reflects on past lessons while eyeing the future. Then CIO Jason Ware notes the signs of post-pandemic normalization emerging, though challenges persist in fiscal policy and market uniformity. As investors navigate this evolving landscape, Financial Planner Anders Skagerberg describes practical measures that can safeguard financial identities. This autumn as nature changes, investors must be vigilant and adaptable in a dynamic financial ecosystem.
Beyond these informative articles, read through to the Community Update for information about our final Conference Call of the year and to meet the newest members of our growing team.
From John Bird’s Desk
When we started Albion in 1982, the era of the “Nifty Fifty” had drawn to a close and much ink was spilt describing their rise and…the several following years when they were just average. For those of you who may not have experienced it, the Nifty Fifty was a moniker for a group of large and fast-growing companies in the1960’s and into the 1970’s. Names included General Electric, IBM, Sears Roebuck, Xerox, Proctor and Gamble, and Coca-Cola. Many investors considered them one decision stocks – companies you could buy and own forever. Investors bought them by the truck load. By the end of 1972 the group as a whole had a price-earnings ratio of 43 while the S&P 500 as a whole had a ratio of 18. For those who are unfamiliar with a price-earnings ratio (PE ratio or just “PE”) it is the price you pay for a dollar of corporate earnings. A PE of 18 means you pay $18 for a dollar of corporate earnings while a PE of 43 means you pay $43 for a dollar of corporate earnings.
All things being equal we’d rather pay less for a dollar of corporate earnings. However rarely are things equal. In the five years leading up to the end of 1972 the Nifty Fifty stocks had as a group averaged 22% annual earnings growth (compared to 4% for the S&P 500) and 30% earnings growth in 1972 alone (13% for the S&P 500). Investors were willing to pay up for growth they expected to continue well into the future.
Alas parties all must eventually end. By 2001 only one Nifty Fifty company – Walmart – had continued to outperform the S&P 500. Another item of note is how the composition of the stock market has changed over time. The following graph shows market sectors from 1807 through 2017.
There are several takeaways from this including the observation that the best performing sector in the future may not yet exist. It’s also worth noting that none of the sectors wholly disappeared. In fact all sectors continued to grow. For most sectors their representation on the graph shrunk because they grew far slower than other sectors and thus represent a smaller percentage of the overall economy.

These days we hear about the magnificent seven – seven companies that have grown far faster than the S&P 500. We note that in 2023 these magnificent seven delivered as a group 101% returns while the equal weighted S&P 500 index delivered 2.5%. Meaning the average stock in the S&P 500 returned 2.5%. There is logic to this. The hardware, software, energy and intellectual property investment required to make Artificial Intelligence and Large Language Models favors those companies with the ability to raise enormous amounts of capital and effectively put that capital to work. The magnificent seven have those resources.
Note that this concentration – where a handful of companies have an outsized influence on market index returns – has a precedent. The following graph shows the weight of the ten largest stocks in the S&P 500 – currently around 32%. While high it’s not record setting. Prior to 1973 the Nifty Fifty had more concentration in the top ten companies than we see today.

It’s weak comfort knowing concentration among a few names has been greater in the past than it is today given that following peak concentration the Nifty Fifty trailed the broader market. We are well aware of this. We are also aware of the reality that much of technology today requires vast investments to remain at the leading edge and the companies that have so far succeeded in staying out front have a significant advantage. The depth and breadth of their existing capacity and the free cash flow they generate gives them the position and the resources to reinvest and stay in the drivers seat.
We will ride our winners, trim them from time to time to avoid being over exposed, and carefully study market dynamics to increase the odds that we will have even further reduced our exposure to highfliers before they fly too close to the sun. Because there is no such thing as a one decision stock.
Economy & Markets by Jason Ware
For over three years in these pages (and elsewhere) we’ve spoke of “normalization” both economic and social. Normalization is the process of, well, getting back to normal. Across so many areas – GDP growth, consumer spending (the how and how much), supply chains, inflation, jobs, corporate earnings, oh, and the vaccines that gave us our lives back – this has happened. Now it’s interest rates. With the Fed’s -0.50% “jumbo cut” on September 18th a new easing cycle is underway. And with it, an oxymoronic feeling that perhaps somehow we’re now reaching … er … “peak normalization.” Wait, is that possible? Can that even be a thing? We’ll leave that philosophical question for another day. What seems quite clear is that there are few major chiropractic adjustments left on the post-pandemic economy. Normal is good, yet there are other areas where stuff is out of whack. The big ones being a more uniform equity market and fiscal policy. More on these in a moment. For now, let us review where things currently stand.
Our economic outlook has been uncharacteristically cautious for several quarters. A host of troubling leading indicators, Volcker-esque Fed tightening, shrinking money supply, a massive inflation surge, and downbeat consumer attitudes informed this view. Recession risks were high, have since diminished, but remain elevated. Through it all the US economy has stayed on a growth course, running a gauntlet that would make Churchill proud (“if you’re going through hell, keep going”). Total output (GDP) paced at roughly +2.25% in the first half of the year and is presently running about +3% for the third quarter. This stride may slow as we exit the year, though probably not to recessionary levels. The expansionary impact of large fiscal spending, abundant real wage growth, impressive business profits, and colossal capital formation (i.e., spending and investment) on AI has offset headwinds. As we opined in our last quarterly epistle, it’s a “growth at all costs” backdrop paired with an animal spirits redux in technology driving the business cycle. The fabled “soft landing” is possible; we all hope it occurs.
On the inflation front, an area of focus since 2022 and one where we’ve consistently offered an out of consensus sanguine view (don’t fret, it’ll sort itself out), it seems that Jerome Powell finally feels content giving the nod that it’s successfully been whipped. “WIN” buttons back into the drawer! To be fair, when assessing all manner of inflation details swirling about it is sensible to conclude that price stability has been achieved and underlying pressures have quieted. Still we reason that structural inflation falling much further is unlikely. Prior to the pandemic core inflation reliably ran at 1-2%. For many reasons, today and over the next few years it’ll probably run between 2-3%. Framed another way, from 2008-2021 the Fed’s 2% target was a ceiling; in the 2020s it will probably be a floor. This isn’t a bad thing. The economy and financial markets can do well in a 2-3% inflation regime.
Speaking of financial markets, US stocks continue apace. It’s been a fruitful year. One item that has changed since our last letter, albeit it’s early days, is the character of those returns. It’s no secret that a small group of lopsided winners account for the lion’s share of gains in this bull market. It’s been a “skinny bull” as we’ve coined it, but that might be shifting. The third quarter was the first time in the contemporary bull run where growth stocks, especially of the mega cap variety, did not lead the way. Instead, other areas like value, cyclicals, defensives, and small caps (eureka!) logged superior advances when compared to their big siblings. At last, Nvidia and AI wasn’t the only story worth discussing. On Wall Street it’s said that “trees don’t grow to the sky.” Translation: nothing lasts forever, future returns get pulled forward, analysts catch up to the story, and lofty expectations become harder to beat. The notion of a resilient economy coupled with Fed rate cuts is just what the doctor ordered for other parts of the equity market that aren’t the “Mag 7.” Finally, it’s been the “493’s” (500 S&P stocks minus 7) day in the sun as participation broadens out. This is a positive development for both your well diversified portfolio and the overall health of the bull market. To be clear, we expect good results from the mega cap stocks going forward. A more uniform market doesn’t have to mean they falter. Rather, we suppose a truly rising tide can lift more boats and the once yawning performance gap enjoyed by the few will better include the many. Stay tuned.
OK, “big fiscal” was cited as the other area that has evaded normalization’s grasp. Out of respect for our collective blood pressure we’ll skip the details. Deficits continue to run at ~6% of GDP, a high spot outside of war, crisis, or economic slump. Full employment and giant deficits are, historically speaking, strange bedfellows. What’s more, interest costs are now larger than total military spending. Just about everyone (including your humble wealth manager) agrees something must be done while simultaneously acknowledging the discouraging political realities in the Beltway. Forecasts from CBO, GAO, and professional economists alike aren’t uplifting. Sigh. But it isn’t all dire. Interest expense aside, much of the current outsized spending is flowing to productive uses, like the
first true “US industrial policy” in decades. We’re investing in our future and putting money to work on our own soil bestowing an assortment of longer run economic and national security benefits.
Bigger picture, the American system endures as the most innovative, dynamic, nimble, and resourceful economy on the planet. The finest universities, brightest minds, and most cutting-edge companies all reside here, not to mention the deepest and most efficient capital markets around. Combined, this is what Buffett calls the “American tailwind” – a force the now 94-year-old sage still believes will propel us onward in the generations to come. We concur. Although improved fiscal restraint is needed, an exercise with observable levers we can pull, forecasting any such fiscal normalization is difficult (too grand an ask for this author). Importantly, the path between here and there doesn’t have to be, and shouldn’t be, calamitous. And so our belief is that stock prices will continue to do what they’ve always done – track the general path of labor force demographics, economic growth, and business profits, all of which move up over time taking with them the enterprising long-term oriented investor.
Thanks for your continued trust in us.
Planners Corner by Anders Skagerberg
Should You Freeze Your Credit? A Simple Guide to Protecting Your Identity and Your Wealth
At a time when data breaches feel common, it’s natural to wonder if there’s anything you should do to protect your personal information and your hard-earned wealth. If you’ve ever heard about freezing your credit, you’re not alone—many people are asking whether it’s a good idea, especially with the recent data breach that may have included the personal records (names, addresses, Social Security numbers, and more) of up to 2.9 billion people.
So, if you’re wondering whether you should freeze your credit or not, read on to decide if it’s the right move for you.
But First, What Does Freezing Your Credit Mean?
Freezing your credit means putting a lock on your credit reports.
This stops identity thieves from opening new accounts in your name because creditors can’t check your credit report unless you “unfreeze” it. It’s like putting a padlock on a file—someone might try to access it, but unless they have the key, they won’t succeed.
Next, here are some of the key benefits to consider when freezing your credit:
The Upsides of Freezing Your Credit
- A Strong Defense Against Fraud: If your credit is frozen, thieves can’t open new credit lines, loans, or credit cards under your name.
- Peace of Mind: Knowing your credit is locked up can help you sleep better at night, especially if you’re already concerned about your financial security.
- No Harm to Your Credit Score: Freezing your credit doesn’t affect your score, so it’s a no-strings-attached way to add a layer of protection.
- Easy and Free: It’s free to freeze and unfreeze your credit with all three major bureaus—Equifax, Experian, and TransUnion. And doing so is relatively simple and can be done online.
While freezing your credit offers a solid defense against fraud, peace of mind without harming your score, and is both easy and free, it’s important to consider the potential downsides.
The Downsides of Freezing Your Credit
- A Bit of a Hassle: If you’re planning on taking out a loan, mortgage, or even a new credit card, you’ll need to lift the freeze temporarily. It’s not hard, but it is one more thing to think about.
- Can Slow Down Some Transactions: Some things like getting utilities set up may require a credit check, so you’ll need to remember to unfreeze your credit for those too.
- Not a Cure-All: A credit freeze doesn’t stop all types of identity theft. It’s great for blocking new lines of credit but won’t protect you from other issues like tax fraud or someone getting into your existing
accounts.
So, while freezing your credit is a proactive step to protect against identity theft, it can be somewhat inconvenient, may slow down certain transactions, and does not guard against all forms of fraud.
So, Should You Freeze Your Credit?
Ultimately, whether or not you should freeze your credit depends on your financial situation, your personal risk tolerance, and whether or not you’ve been involved in a security breach. Here are some questions to consider:
Have you been involved in a security breach?
If Not: Freezing your credit may not be a top priority. That said, even if you aren’t aware of a security breach involving your personal information, that doesn’t mean it hasn’t happened.
If Yes: Freezing your credit can be a great step to help protect you from identity thieves.
Are You Applying for New Credit?
If Not: Freezing your credit might be a smart move, especially if you don’t foresee needing a new loan or credit card anytime soon.
If Yes: You’ll want to consider the hassle factor, especially if you’re in the middle of a major financial move like buying a new home.
What Other Protections Do You Have?
If you already have identity theft insurance or monitoring (or both) then freezing your credit can either be a great addition to your existing protection, or, you may decide it’s unnecessary, depending on your situation.
How Much Protection Do You Want?
Just like investing, everyone has a different comfort level with risk. That comfort level will guide your decision on whether to freeze your credit. But unlike investing, there’s really no advantage to taking extra risk by leaving your credit unlocked. Since freezing your credit is simple and comes with no downside, it’s often a smart move to just take the time and lock things down for peace of mind.
Part of a Bigger Picture
At Albion Financial Group, we believe that making smart decisions over time is key to securing your financial future. Freezing your credit can be one of those good decisions, but it should fit into a broader plan that includes monitoring your accounts, maintaining solid cybersecurity habits, and keeping tabs on your bigger financial picture, either on your own, or with the help of a trusted advisor.
Now, if you’ve decided that freezing your credit is the right choice, here’s what you need to do:
Meet the Three Major Credit Bureaus
When you decide to freeze your credit, you’ll need to do it with the three main credit bureaus:
- Equifax: One of the oldest and most recognized credit reporting agencies. Freezing your credit with Equifax is simple and can be done online.
- Experian: Known for their credit monitoring services, Experian also allows easy credit freezes. Their website walks you through the process stepby-step.
- TransUnion: Like the others, TransUnion’s freeze can be done quickly online.
Once you’ve got your credit freezes in place, just remember that you’ll need to unfreeze your credit when applying for any new loans, and then you can always refreeze it when you’re finished.
Important note: Freezing your credit with just one or two bureaus won’t fully protect you, as lenders can check any of the three major bureaus when reviewing credit applications. For complete protection, you should freeze your credit with all three agencies. In addition, while smaller agencies like Innovis, ChexSystems, and NCTUE may also hold some of your information, the majority of credit applications are processed through the three main bureaus, so freezing your credit with them will cover most scenarios.
Wrapping It All Up
In the end, deciding whether to freeze your credit is like deciding whether to put extra locks on your doors. It’s not necessary for everyone, but for those who want that extra peace of mind—especially with the recent data breach—it can be a wise choice.
ALBION COMMUNITY UPDATE
Conference Call: Scheduled for Tuesday, November 12th at 10 AM MT. Our expert panelists from the Advisor and Investment teams will discuss key issues and provide insights on the current economic and market landscape.
We highly value these moments to connect and share ideas with you. We encourage your participation and welcome any questions you may have—either live during the call or in advance by sending us an email. A recording
of the call will be available on our blog and YouTube channel afterwards, and a copy will be emailed to you. We hope you can join us. www.albionfinancial.com/events
New Faces
We are delighted to announce that Briana Mofhitz-Faieta and Leticia Chetty have both joined the firm as Associate Wealth Advisors. Both of them will be working closely with Liz Bernhard and Patrick Lundergan.
Briana is an alumna of the University of Oregon, while Leticia has degrees from both Brigham Young University – Hawaii and from Utah Valley University.
Also joining the Albion family, as a Financial Planner, is Heath Heavy. Heath is a graduate of Western Michigan University (Go Broncos!) and is a CFP®.
Albion Financial Group is an SEC registered investment advisor. The information provided is intended solely for educational purposes and should not be construed as an offer or solicitation for the purchase or sale of any particular securities product, service, or investment strategy. Past performance is not indicative of future performance. Additional information about Albion Financial Group is also available on the SEC’s website at www.adviserinfo.sec.gov under CRD number 105957. Albion Financial Group only transacts business in states where it is properly registered, notice filed or excluded or exempted from registration or notice filing requirements.