AssetMark Financial (AMK) Investor Update summary

Market performance and concentration

• Global equities rose nearly 12% in the first half of 2024, led by U.S. stocks up 15.3%, while commodities gained 5% and a 60/40 portfolio returned about 6%.

• Market gains were heavily concentrated in a handful of large technology and AI-related stocks; removing the top five from the S&P 500 turns positive returns negative for the quarter.

• The top 10 stocks now comprise 37% of the S&P 500, surpassing the concentration seen during the 2000 tech bubble, though these companies are currently profitable.

• Broader diversification remains important, as most stocks and international markets have lagged the S&P 500's narrow leaders.

Artificial intelligence and sector impacts

• AI-related companies, especially NVIDIA, have driven much of the market's performance, but only a small percentage of S&P 500 firms have implemented AI in operations.

• Utility companies and other less obvious sectors have also benefited from the AI trend.

• Audience sentiment is mixed on AI's long-term economic impact, with most believing its effects remain to be seen.

Inflation trends and outlook

• Headline inflation measured by CPI is at 3%, with goods prices falling due to resolved supply chains, but services, especially shelter, remain elevated.

• Shipping costs, influenced by geopolitical events, could impact future goods prices, but increased apartment supply is expected to ease shelter inflation.

• Inflation is projected to trend lower, though not in a straight line, with relief expected in late 2024 to early 2025.