On Tuesday, New Market Wealth hosted our latest Strategic Discussions event with featured speaker, Wood Turner of Agriculture Capital. 

Our CEO Daryl Deke, opened the event with remarks about the current state of the capital markets and our views on how best to position investment portfolios given today's environment. He shared exhibits that illustrated how "the market" has rallied over 300% since the start of this bull run, but how, upon closer inspection, the rally has really been limited to US equities, and those returns have been driven by a narrow sector of stocks (growth) and truly, just a handful of growth stocks (those known as the FAANGs - Facebook, Apple, Amazon, Netflix and Google) have accounted for the bulk of the returns. 

The message was clear, over both the short and longer term, diversification into anything other than US growth has not worked. However, Daryl went on to show some eerie similarities between today's market and the tech bubble of the late 1990's. He outlined some scenarios that could derail corporate earnings which have been propelling the stock market higher. He pointed out that despite the recent experience, asset allocation - the mix of stocks, bonds, and alternative investments - is still the most important factor affecting long term performance. Last week's stock market sell-off, which has now been followed by a strong rebound today, simply reinforces the point: trying to guess which way the stock market will move on a short term basis simply does not work. Diversification remains the most prudent way to protect your portfolio. Finally, Daryl shared our thoughts on where we see opportunities beyond traditional US equities and bonds. 

Wood Turner's entire presentation spoke to this very idea of finding investment opportunities beyond traditional stocks and bonds. His firm aims to develop regenerative food and an agriculture system that produces better food at scale while delivering healthy returns to investors. 

At a macro level, he sees climate as having a huge impact on California agriculture in the coming decades. He shared that by the year 2030, we will have a need for 30% more water, 50% more energy and 50% more food than what is required today. But climate change increases the likelihood of drought and water scarcity; heat impacts crop quality, pest damage and harvest timing; climate change also exacerbates labor access and productivity. 

His message: Building resilience in the face of these challenges will require intention and investment, and that may be where opportunity lies. Wood talked about how his firm is at the forefront of water stewardship and what he called "climate smart operations." Those include things like investments in solar energy, soil conservation, pollinator optimization, permanent crop agriculture as well as food waste and packaging reuse.