Ron Finke: Investments on rise despite downtrend

Recently I wrote about the difference between two major groups of stocks in the U.S. stock market.

The total of technology companies – 1,055 by one measure – have dropped by a composite of 10.4% year to date through Monday afternoon. That is the worst sector thus far. On the other hand, the best performing sector has been communication services with 60 companies more valuable by 9.28% in three months.

Since such an extreme emphasis has been placed upon the S&P 500 index in the past decade or two, this overvaluation of the elephants becomes a self-fulfilling prophecy. The mantra has been that investing is easy! Just put all of your money into the index. It has worked really well while the Federal Reserve Board manipulated interest rates downward since 2008 to force Americans toward higher risk in a form of brainless investing.

The period of 2000-03 bears strong similarities to current conditions, even if for somewhat different causes. The extreme heights to which stock prices can be (and often are) lifted obviously occur as with other observable phenomena of our world and especially related to human nature and behaviors. Pendulums swing in both directions and excesses are quite natural.

My encouragement to all of us is to remember that American and world stock markets are truly markets of individual sectors, industries and companies. For example, when business seems to be slowing down, whether or not an official recession occurs, stocks of companies that are seen as less discretionary perform better.

AT&T has been in a funk (that's a technical investing term) since its all-time high point of January 1999, at a price of $45.24 (adjusted for stock splits). Its low point of $13.43 was reached in July 2023, but it has now more than doubled. Through March 31, its value has risen by almost 25% in 2025. How is that for bucking the downtrend?

Why? It is quite clear today that having a cellphone with service is even more important than having a roof over one's head. Therefore, Mr. Market is counting on all of us paying our phone bills no matter what. T-Mobile US (TMUS) and Verizon (VZ) are also up nicely this year.

Where else can you look for value? After hitting a low point in early March, the energy sector has recovered well and is higher than Dec. 31 by over 6%. Of about 250 companies, more than 50 of them have gained at least 10% this year.

Health care is also usually recession resistant. Although many firms in this space are small and not necessarily cheap by price-to-earnings ratio, there are 160 of more than 1,100 that are higher by at least 10% year to date. Be choosy about those.

Inflation has not yet been tamed sufficiently, and commodities are still trending upward. Sprott investment company provides an opportunity to own physical metals in their vaults. The Physical Silver Trust (PSLV) and Physical Gold Trust (PHYS) have both gained over 19% so far in 2025.

As you can see, not all is lost. But in these times, it is not as easy as using the dart board. You do not need to sell everything and buy CDs to make money with your money. But as you know, past performance is absolutely no guarantee of future results!

(Statistics from Worden Bros., Inc., TC2000 software, 2025.)

Ron Finke is president of Stewardship Capital in Independence. He is a registered investment adviser. Reach him at rcfinke@stewcap.com.

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