Charleston

“Charleston! Charleston! Made in Carolina. Some dance, some prance, I’ll say, there’s nothing finer. Than the Charleston, Charleston.” 

–Charleston, James Price Johnson, 1923 

Great Valley Advisor Group convened its latest Annual Advisor Conference at the Hotel Emeline in Charleston, South Carolina earlier this week.  The event was an opportunity for advisors, investment partners, and the GVA team to gather in one of the country’s most historic and picturesque cities to share ideas on strategies for future growth, developments in financial technology, the outlook for the economy and markets, the latest investment opportunities, immersive dining experiences, and great conversation with family, friends, and colleagues.  Since mine is to market strategize, the following were some of the key investment related takeaways from the event. 

“Calm as that second summer which precedes. The first fall of the snow, In the broad sunlight of heroic deeds The city bides the foe.” 

–Charleston, Henry Timrod, 1860 

I will share going into the conference that I have been and continue to be, as Mike Arone best described it during our fireside chat on Tuesday, “uncomfortably bullish”.  I am of the view that risk asset prices – stocks, bonds, precious metals – are all poised to continue to climb through the remainder of 2025 and into the start of 2026.  But an increasing fragility and “radioactivity” continues to gather under the surface of these persistently glossy markets.  One other contrast is worth mentioning.  I remain more bearish on the intermediate term outlook as we progress through 2026 than my several esteemed investment partner colleagues that presented at our annual conference.  But it is the ability to compare and contrast such varying expert views that make a conference like Charleston so worthwhile.  So, without further ado, let’s dive into the investment highlights from the GVA annual conference. 

Bonds.  It was easily the most entertaining and funny presentation on bonds that I’ve seen over my three decades in the business.  Yes, you read that previous sentence right – thank you David Braun and the PIMCO ETF team that serves as the backbone for our fixed income model strategies.  And David’s presentation was also rich with content on why investors should be constructive on bonds as we enter 2026. 

First, core investment grade bonds offer an attractive yield toward 4.5%, which forms a floor beneath expected bond returns.  And given that current yields have a 94% correlation with 5-year forward returns from bonds coupled with the fact that bond returns have been trailing this implied expected return in recent years (potential upside regression to the mean – love it!), this implies that bonds are set to provide a rock solid mid-single digit annualized return for investors through the rest of the decade. 

Haunted by the 2022 bond market -13.0% decline on your Charleston ghost tour?  Indeed, but David reminded us how much of an outlier 2022 was over the last 35 years, as the second worst year for core bond market returns next to 2022 over this time period was 1994, which was down by only -2.9%.  Taking this one step further, only five years out of the last 35 saw negative bond returns at all.  This is an 86% positive calendar year return win rate for core bonds over this 1990 to 2024 time period. 

These were just a few of the many great points in support of the bond market outlook shared by David during his presentation. 

So, what was still keeping this Chief Market Strategist up at night other than the copious steak, seafood, and spirits (libations, not the apparitions!) enjoyed before retiring over the past few days?  The one thing that was continuously missing from the economy over the past 35 years outside of 2022.  A sustained rise in inflation.  Lavinia Fisher and Nettie Dickerson, eat your hearts out (figuratively, of course). 

Stocks.  Next up on the investment front were our colleagues Amy Foland, CFA and John Speer, CFA, who have led JP Morgan’s development of custom model small account solutions for GVA Asset Management and our advisor clients.  The JP Morgan team is constructively bullish on the stock market outlook and provided tons of good evidence to back up the thesis including the following: 

• Steady economic growth supported by accommodative fiscal and monetary policy 
• Healthy corporate profit outlook across the globe supported by earnings quality and productivity gains 
• Continued strong growth in capital expenditures, particularly focused on AI investment and industrial production in high tech industries 
• A steady broadening of earnings growth beyond the Mag 7 

Even with the S&P 500 trading at new all-time highs, our friends at JP Morgan provided a compelling case based on cumulative S&P 500 total returns over the past four decades why it may be even more compelling than not to allocate to equities today despite trading at peak levels, as investing at all-time highs versus any trading day since 1988 has resulted in a more than six percentage point cumulative return advantage over a five year period. 

But once again, this risk management focused Chief Market Strategist remains “uncomfortably bullish”.  I recognize and share all of the positive views expressed by the JP Morgan team.  With that said, historically rich tech valuations coupled with an astronomically high bar of expectations for future AI related growth in a broader market on the S&P 500 that continues to run well above trend means that a mere sneeze from a major player nestled in the intertwined bowl of AI spaghetti could result in an angry bout of mean regression at best stretching over several weeks to a few months at any given point in time.  Throw in some margin compression or a renewed rise in inflation, and down -40% or more on some of these highly profitable but even more high-flying tech names is not out of the question even if the underlying fundamentals remain constructive.  Remember, the largest company in the world by market cap in NVIDIA dropped from $153 to $86 (down -43%) in the first four months of this year (remember when earlier in 2025?) before rising to $212 and landing at $188 today.  And lest we forget that this same NVIDIA dropped by -70% from November 2021 through October 2022 before bouncing back in the tailwinds of the AI “bubble”.  This is Provost Dungeon kinda scary volatility when it’s moving to the downside, particularly if we don’t get the subsequent bounce to new all-time highs the next time around. 

Fireside chat trilogy.  The last of our three economic and market focused discussions as mentioned above was with State Street’s Mike Arone.  This marked the third time in the last three years that I’ve had the honor to take the stage with Mike to ask him questions, as he enlightens the audience with his perspective and expertise.  And this time around Mike was as good as ever.  Here were some of his key takeaways: 

• As mentioned above, Mike like me is “uncomfortably bullish” 
• Stimulative monetary policy, the fiscal boost from the One Big Beautiful Bill, increased tax refunds in the year ahead, and still strong corporate earnings growth are all powerful forces to drive risk asset prices to the upside 
• Mike’s two primary risks to the outlook are (1) a re-acceleration in inflation, particularly if labor markets hold up better than expected, and (2) future earnings start to disappoint with valuations already stretched 
• Despite these risks, Mike maintains his optimism that positive forces will outweigh the negative and that investors will continue to climb the “wall of worry” into 2026 
• This includes a potential broadening of stock market performance beyond the tech/AI space 

 Those that have followed my views over the past few years know that much of what Mike communicated in Charleston is consistent with my own market views, particularly as they have evolved as 2025 has progressed.  I was more “resoundingly bullish” in the first half of 2025, particularly during the tariff induced market selloff that became wildly overdone given the fundamental backdrop at the time but have moved increasingly to the “uncomfortably bullish” camp as we bring 2025 to a close and head into 2026.  I also share his generally constructive view on real assets going forward.  I would say the differences in Mike and my view resides more on the margins.  While Mike stands more on the side that markets are poised to maintain their strength despite the downside risks, I am a step or two more to the less optimistic side.  This nuanced difference is best encapsulated by how we see today’s market rhyming with history.  While I find myself saying that today’s market mood is increasingly reminding me of 1999, Mike is of the view that today’s market mood reminds him more of 1998.  And as shown in the chart below, the “you are here” difference between 1998 and 1999 makes a notable difference on expected market results heading into 2026 and 2027.

 “We know not; in the temple of the Fates, God has inscribed her doom; And, all untroubled in her faith, she waits The triumph or the tomb” 

–Charleston, Henry Timrod, 1860 

Charleston.  These were just a few of the highlights from what was an interesting and informative set of days for our latest GVA Annual Advisor Conference.  And as it relates to exploring what to expect from the economy and markets over the coming year and beyond, the ability to come together to discuss and explore these comparing and contrasting views from some of the leading experts in the country was invaluable in helping to determine how to set and maintain investment strategy in the months ahead.  It was a great time seeing everyone in Charleston, and I look forward to being together again in the future for our next gathering of advisors, investment partners, and friends. 

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Investment advice offered through Great Valley Advisor Group (GVA), a Registered Investment Advisor. I am solely an investment advisor representative of Great Valley Advisor Group, and not affiliated with LPL Financial. Any opinions or views expressed by me are not those of LPL Financial. This is not intended to be used as tax or legal advice. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Please consult a tax or legal professional for specific information and advice.

LPL Compliance Tracking #825716.

Eric Parnell, CFA Chief Market Strategist

Eric Parnell is the Chief Market Strategist for Great Valley Advisor Group. Eric applies his expertise in finance and economics to manage multi-asset portfolios, mitigate risk, deliver advice that promotes informed decision-making, and facilitate investors achieving their short-and long-term investment goals. He leads the GVA Asset Management platform overseeing the management of asset allocation models for GVA advisors and their end clients.

See Full Bio