Quarterly Newsletter- Q4 2025

Richard Law, CFP®, CPWA®

October 08, 2025

The Parker Group

Quarterly Newsletter

"I don't know

But I've been told

If you keep on dancing

You'll never grow old

Come on, darling

Put a pretty dress on

We're gonna go out tonight”

“Dance, Dance, Dance”,

-Steve Miller Band

Who Needs a Government Anyways?

I can think of few terms more ominous than “government shutdown”. What do you mean the government shut down? Is it on vacation? Does our government get sick days? If the government is shut down, do I still have to follow the speed limit? Are taxes optional now?

I might be exaggerating a little, but I do think it’s a great time to talk about what a shutdown is and what the markets think about our friends in Washington taking a sabbatical. If you’re over the age of 60, you might not remember government shutdowns happening before your adult years. And that’s because they didn’t happen! Prior to 1976, the government kept operating even if it didn’t have the money to pay its bills. It just assumed that they would figure things out soon enough that it wouldn’t be a significant problem.

However, in 1976 Congress implemented a new budgeting process and in 1980, Attorney General Benjamin Civiletti issued legal opinions that government organizations could not spend money without congressional approval. This meant that if there wasn’t a passed budget, there could be no spending. This is typically what happens when we experience a government shutdown. The government’s budget expires at the end of its fiscal year on September 30, and it fails to pass a new one.

The first shutdown occurred in 1980 and we’ve experienced 10 more since. In recent years, shutdowns have provided an opportunity for Congress to perform some of its most impressive posturing. Each party uses the moment as an opportunity to publicize changes they’d like to make to the budget. But if there is no spending, then all nonessential federal services are halted with employees furloughed or placed on unpaid leave. This leaves only essential operations like the military, the post office, and air traffic controllers.

The fear around a government shutdown depends greatly on the economic environment. There is no doubt that a shutdown causes economic hardship. Over 500,000 government employees cease getting paychecks during a shutdown. When the economy is strong (this year is a good example), fears are muted. The S&P500 was actually in the green during the week of September 30 despite an announced shutdown this year. If the economy was in a more precarious position, fears would be stronger and markets more volatile. The same would be true if a halt were prolonged, as it was in 2018 when a shutdown lasted over a month.

Generally, shutdowns are little cause for concern when their duration is short and our economy is strong. But when resolutions can’t be found and times are hard, investors have every right to keep a nervous eye on our friends in Washington.

Q&A

Clay Buttrey

Where are you from?

I grew up in White Bluff, Tennessee, as the second of seven children.

How did you find your way to giving financial advice?

My journey started in 11^th grade when my Uncle Roscoe took me on a trip to Cookeville, Tennessee. He was the president of Third National Bank and took me to meet the president of Tennessee Technical University. He told him to make sure I got into school there. I looked up to Uncle Roscoe, so I went to college there after graduating high school in 1969.

I studied engineering, and I think it was the hardest thing I’ve ever done. I didn’t come from a prestigious high school, but I worked hard and made good grades my last two years. In the summers, I worked for a construction company out of Illinois to help pay for some of my college. After college, I got my first job working as an engineer at Brown and Williamson in Virginia. All I had when I left Tennessee Tech was a broke-down AMC Gremlin (that had to tip-toe by a junk yard), $90 in my checking account, and $5,000 in college debt.

In 1975, I made my way to Columbia, Tennessee, where I worked for Occidental Chemical as a plant engineer in one of their many phosphate plants. I did well and was later promoted to Plant Manager. At just 30, I was the youngest Plant Manager in the history of the company.

Since I was just 23, I had always been a good investor. Over the years, I built a reputation as someone who was financially wise. So when my engineering career came to an end, I joined Merrill Lynch’s financial advisor trainee program in the class of 1999. I partnered up with the Parker brothers soon after, and the rest is history.

What lessons has our business taught you?

No two people are alike. Everyone has their own desires, risk tolerance, and background. It's our job to get to know all of that about the people we work for.

What financial advice would you give someone who’s just starting their adult life?

Be patient when investing. Be quick to buy and slow to sell. Buy quality companies.

What message would you like to give our clients?

More than anything, thank you for the confidence you have in us. I like to think we've earned it over the years, but we never take it for granted.

Upcoming Events

We have several events we’re excited to share with you in the coming weeks. So keep an eye on your emails for invites.

December 4- Scam Awareness (Virtual Event)
Join two of Baird’s fraud experts in a live webcast for a conversation about common scams that target each of us on a daily basis. They’ll be providing real-life examples, what to watch for, and an introduction to Baird’s new identity theft partner, ID Watchdog

December 6- Columbia Christmas Parade on the Front Lawn
The hot chocolate will flow as we watch the 40^th annual Columbia Christmas Parade pass by our office. Just bring a lawn chair and a friend!

Baird Client Benefits:

New Identity Theft Protection with ID Watchdog

In a world that constantly asks us to share our information online, it’s more important than ever to make sure your identity is protected. Recently, Baird partnered with ID Watchdog to help keep our clients safe online and beyond. As a leader in the industry for identity theft protection, ID Watchdog offers clients a wide range of protections that extend far beyond just credit monitoring.

ID Watchdog monitors for lending fraud, social media hacks, credit score dings, personal information on the dark web, child credit fraud, and financial account fraud. Beyond just a financial tool, they provide registered sex offender report monitoring, a personal VPN, a secure password storage tool, and up to $5 million in identity theft insurance.

Baird clients get a significant discount to join ID Watchdog, so please reach out to our team at 931-548-3737 or email theparkergroup@rwbaird.com for help with enrollment.

Chart of the Quarter- Zillow Housing Projections

In September, Zillow released its 2026 housing price projections for the coming 12-month period. ¹⁰They estimate an increase of 1.2% with lower mortgage rates as a catalyst for growth. Metros on the eastern side of the Mississippi (Atlantic City, Concord, Hartford, Knoxville, Rockford) dominated the list of those expected to grow the most. Interestingly, all 15 metros expected to decrease the most in price lay in one of three states: Texas, Louisiana, and California.

Market Update

Stop me if you’ve heard this before: “The AI boom showed no signs of slowing, with companies announcing massive investments in AI infrastructure, fueling a strong rise in technology stocks.”¹ It’s a good summation of why the third quarter was more than just positive, but outstanding. Some of the market-moving headlines from the quarter included:

“Nvidia Hits Highs As Meta, Microsoft Unveil AI Spending Plans”²
“Broadcom Shares Rally as $10 Billion Chip Deal Shows AI Strategy Paying Off”³
“Oracle Stock Rises As Agentic AI Powers Next Wave Of Enterprise Automation”⁴
“Taiwan Semiconductor’s August Sales Rise 34% as AI Demand Stays Strong”⁵

If America’s CFO’s were nervous to spend money during the tariff scares of the first few months, they certainly found their wallets in Q3. Corporations made massive expenditures to ensure they are using artificial intelligence to wring every drop of efficiency from their companies. Let’s try to wrap our heads around this boom using numbers.

The AI Boom in Numbers

The “Magnificent 7” are the largest 7 companies in the S&P 500 (Alphabet, Nvidia, Meta, Microsoft, Broadcom, Amazon, Apple). These companies have all developed a heavy association with artificial intelligence over the past few years. The Magnificent 7 has seen an average of 30% year-over-year earnings growth since 2023, compared to just 4% for the rest of the S&P500.⁶

While not all companies are directly AI producers, many companies have hinged their growth on the growth of AI in one way or another. JP Morgan created a basket of 41 stocks that they consider to be “AI-related”. As of October 6th, that same basket of AI-related stocks now makes up a staggering 45% of the S&P 500. ⁷

Another viewpoint to consider is that AI spending is likely to be a large part of the GDP of the US. While AI only accounts for roughly 1% of GDP, some estimate that it might have accounted for a third of the 4% GDP growth the US has seen during these last two quarters.⁸

The Risk and How to Manage It

Each generation witnesses the introduction of one or two transformative technologies. Our stance has consistently been that we seek for our clients to get a piece of that "AI Pie" when appropriate (acknowledging that every client is different and not everyone is a fit for the stock market or technology space). We believe many of the AI-adjacent names are going to continue to be the bedrocks that our economy and stock market are built on.

On the other hand, there is an old saying about eggs and too many of them being in the same basket. So a fair question to ask might be, “How concentrated in AI should I be?” If you were to have an all-stock portfolio that mirrored the S&P 500, you would have almost half of your portfolio in just the top 10 names in the index. This would also mean having almost 8% of your entire investment portfolio in Nvidia, over 6% in Microsoft, and over 6% in Apple⁹.

While we don’t see an issue with owning these companies when it makes sense, there is a risk that comes with concentration in just a few names. As we look to the future of the stock market, we are constantly assessing the risks and rewards that concentration on a few stocks might bring. When those big stocks do well, that concentration seems like a great move. When they don’t do well, they can be very heavy drags on an otherwise steady portfolio.

So stop me again if you’ve also heard this before, but we encourage you to stick to the plan. We look forward to our next portfolio review with you and your family to discuss these risks and our portfolio decisions. We build those portfolios to help you get to your goals in good years and bad. So no matter what revolution we find ourselves in, we’re doing our best to keep you on the path to success.

Sources and Disclosures

Fixed income is generally considered to be a more conservative investment than stocks, but bonds and other fixed income investments still carry a variety of risks such as interest rate risk, credit risk, inflation risk and liquidity risk. In a rising interest rate environment, the value of fixed income securities generally declines and conversely, in a falling interest rate environment, the value of fixed income securities generally increases. High-yield securities may be subject to heightened market, interest rate or credit risk and should not be purchased solely because of the stated yield. Municipal securities investments are not appropriate for all investors, especially those taxed at lower rates.

An investment in a money market mutual fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency but is protected by SIPC coverage. Although money market mutual funds typically seek to preserve the value of an investment at $1.00 per share, there can be no assurance that will occur, and it is possible to lose money should the fund value per share fall. Most money market mutual funds are required to maintain a stable $1.00 net asset value per share, but some are not.

Investors should consider the investment objectives, risks, charges and expenses of each money market mutual fund carefully before investing. This and other information is found in the prospectus and summary prospectus. For a prospectus or summary prospectus, contact your financial advisor. Please read the prospectus or summary prospectus carefully before investing.

Rates are subject to change.

The calculation of the Standardized 30-Day Subsidized Yield is mandated by the SEC and is determined by dividing the net investment income per share earned during the period by the maximum public offering price of the Fund (“POP”) per share on the last day of the period. This number is then annualized.

Past performance is not indicative of future results and diversification does not ensure a profit or protect against loss. All investments carry some level of risk, including loss of principal. An investment cannot be made directly in an index. Robert W. Baird & Co. Incorporated.