“History doesn’t repeat itself, but it often rhymes.”
It’s a cliché, but for good reason. In our world, forgetting this rhyme scheme shows up as shrinking endowments, rising costs, and familiar crises taking different shapes.
With funding pipelines drying up and volatility becoming the norm, financial officers aren’t just managing money. They are managing resilience. This isn’t about reacting to the next crisis, but about making sure portfolios are strong enough to support the mission, no matter what comes next.
But what does that require today, in a moment where the ground seems to shift beneath our feet each quarter?
2025 So Far: A Year of Signals Buried in Noise
The first half of 2025 unfolded in two acts: panic, then euphoria. In just six months, markets experienced dramatic peak-to-trough-to-peak swings, ranging from 25% to 60%. It’s tempting to treat this as noise. But the emotional toll is real and the structural lessons are too important to ignore.
|
Index |
Jan 1–Apr 8 |
Apr 8–Jun 30 |
1H2025 |
|
S&P 500 |
-15.0% |
+24.9% |
+6.2% |
|
Magnificent 7 |
-25.6% |
+37.0% |
+1.9% |
|
Russell 2000 |
-20.8% |
+24.0% |
-1.8% |
|
MSCI EAFE |
-1.3% |
+21.6% |
+19.9% |
|
MSCI EM |
-6.1% |
+23.1% |
+15.6% |
|
Bloomberg Agg |
+1.9% |
+2.1% |
+4.0% |
|
USD Index |
-5.1% |
-5.9% |
-10.7% |
Tech concentration backfired early in the year, with the Magnificent 7 losing over a quarter of their combined value. US equity dominance fractured, while international markets, buoyed by stronger fundamentals and more balanced cash flows, led the way.
Then came the April 2nd tariff announcement. Markets sold off sharply, bottomed on April 8th, and rebounded just as quickly, led, ironically, by the same names that had triggered the collapse. To some, it looked like recovery. In truth, it was a flashing warning sign: portfolios overloaded with yesterday’s winners are dangerously exposed to tomorrow’s volatility.
Now imagine that moment went the other way:
The rebound, in other words, was luck…this time. But luck is not a strategy.
Lessons from the First Half
2025 has made it clear that long-standing assumptions are cracking. And when signals this loud get ignored, stewards risk compounding damage instead of compounding returns.
What Comes Next?
The signals are clear, but how should stewards respond?
You don’t future-proof an endowment by predicting markets. You future-proof it by preparing for them. Endowments are built to last decades and beyond. They are designed to support missions that stretch across generations. Yet every quarterly report, every board meeting, every news cycle pulls us back into the present with performance charts, peer comparisons, and real-time dashboards. In this environment, staying long-term isn’t just difficult, but almost counter-cultural.
Every week brings new pressures: macro shifts, political volatility, headline-driven AI optimism or panic. The volume has never been higher, and neither has the temptation to react. But the job hasn’t changed: protect capital, grow it steadily, and support mission-driven work through cycles, shocks, and change.
So what does that require?
Not trend-chasing. Not market-timing. Not peer mimicry. A future-proof strategy starts with behavior, then builds around structure, discipline, and durability.
Audit Behavior Before You Audit Benchmarks
Most strategic errors aren’t analytical. They’re behavioral: loss aversion, benchmark envy, and overreaction to underperformance. We’ve seen portfolios abandon fundamentally sound holdings after one tough year, only to miss out on five strong ones. The impulse to act in discomfort is human. But if left unchecked, it’s expensive.
Behavioral finance confirms this: the more frequently we check results, the more likely we are to confuse noise for signal. That leads to poor decisions, bad timing, and lost compounding
Embrace Zero-Based Portfolio Thinking
Forget what’s in the portfolio today. Ask: “If our only mandate was to support the mission for the next 30 years, what would we own?”
This reframing strips away legacy bias. It reveals hidden constraints and demands intentionality. The most resilient portfolios aren’t built around past success. They’re built to preserve choice so that when the environment changes, the portfolio doesn’t back the mission into a corner.
Portfolios Are Decision Trees
Every choice you make has ripple effects.
The best investment teams map decisions like systems. They ask:
Rebalancing, too, is a systemic decision. Especially today.
Because if your portfolio is now dominated by the same mega-cap tech names that led us into this volatility, and you haven’t rebalanced away from them, then you haven’t actually made a choice. The market made it for you. And here's the danger: when a correction comes, which it will, the portfolios that didn’t actively rebalance won’t just take a hit, they’ll crystallize loss. They’ll exit risk, but not from a place of strength.
But it’s avoidable. The point of rebalancing is not to be contrarian for the fun of it. It’s to reduce vulnerability before the next break.
Good investing is rebalancing. Period.
Compounding Isn’t About Maximizing. It’s About Enduring.
You don’t need to win every year. You need to survive every year. That means avoiding permanent impairment.
Cisco was one of the world’s most valuable companies in 2000, briefly representing more than 5% of the total US equity market. Today, more than two decades later, its stock remains over 15% below its peak. NVIDIA recently accounted for over 12% of US GDP in market value. However, its current valuation reflects a future that hasn’t materialized. The price of being wrong at those levels isn’t temporary. It’s structural.
Momentum is not durability and price is not value. Luckily, there’s an antidote to this thought-trap which we could call “the Coca-Cola mindset.”
In 1988, Warren Buffett invested $1.3 billion in Coca-Cola. He never sold.
That stake is now worth close to $30 billion and generates over $800 million in annual dividends. That’s more than $2 million per day, just for holding. Buffett didn’t buy Coca-Cola because it was trendy. He bought it because it was durable. That mindset—not the ticker, but the discipline—is what endowment stewards should seek.
This attitude becomes even more critical when we look at how easily short-term pressure can unravel even the best intentions, something two real-world cases make painfully clear:
These are not hypothetical mistakes. They are real, repeated, and preventable day-to-day realities for stewards navigating noise, pressure, and uncertainty. And they lead to a sharper kind of clarity, one defined not by having all the answers, but by asking the right questions.
Why This Matters
This year marks 20 years since Hurricane Katrina. Some of our team just returned from New Orleans, and while the city looks very different from the devastation of 2005, the recovery is still ongoing and visible in both how far it’s come and how much further there is to go. What’s often overlooked, though, is the role community foundations played, and continue to play, in that long arc of rebuilding.
They didn’t just fund recovery. They enabled it. They kept clinics open when public systems failed. They helped schools reopen, often before infrastructure was fully restored. They supported neighborhoods block by block and family by family, translating resources into real, tangible stability.
That’s what a future-proof endowment does. It doesn’t just ride out volatility or chase returns. It anchors communities. It sustains missions through disruption. And it ensures that when the headlines fade, the work continues.
A future-proof endowment is patient capital in an impatient world. Build accordingly.