When Sentiment is Screaming, Discipline is a Differentiator
- Sparta Wealth Partners
- Dec 7
- 9 min read
“The ability to simplify means to eliminate the unnecessary so that the necessary may speak.”
– Hans Hofmann
The past few years have shown how quickly market regimes can shift — from a long stretch of falling rates, to the rapid tightening cycle, and the adjustments we’re seeing today.
These transitions don’t reward prediction; they reward process. When conditions change this quickly, discipline becomes the differentiator. A clear, systematic investing approach keeps decisions grounded in data instead of sentiment, and that matters most when the environment is moving faster than investor intuition can keep up.
Our role isn’t to guess what comes next. It’s to stay aligned with the trends that actually emerge and adapt as those trends evolve. That’s what we believe has the power to keep portfolios steady when cash feels comfortable, and what allows them to participate when other assets begin to strengthen.
Discipline — not timing — is what turns market transitions from a source of anxiety into an opportunity.
This month’s Note looks at how the changing rate landscape influenced T-bills and why a rules-based process helps investors stay aligned with what markets are doing, not what they’re supposed to do.
But first, here’s a summary of the global asset classes utilized in our portfolios and their exposures for December.
U.S. Equities Exposure will not change and remain overweight. Both the intermediate- and long-term trends are positive. | International Equities Exposure will not change, with both foreign developed and emerging market equities remaining at their baseline allocation. Trends continue to be positive across all timeframes. |
Real Estate Exposure will not change and remain at its minimum. | US and Intl Treasuries: International Treasuries have weakened to downtrends across all timeframes. The result will be a shift in exposure to stronger U.S. Treasuries, which will move to overweight. |
Inflation-Protected Bonds Exposure will be at its minimum. Trends are still positive but the group remains weak versus other fixed income assets. | Alternatives Exposure is expressed through a multi-asset alternative ETF. Bond exposure remains the largest allocation despite net long exposure falling slightly during the past month. Stocks also experienced a decrease in their net long position but remains the second-largest net allocation. Commodity exposure is net long, with longs in metals increasing and outweighing shorts in grains. Exposure to international currencies also continues to be long relative to the U.S. Dollar, but is decreasing. |
Short-Term Fixed Income Exposure will not change and remain at baseline. |
Asset-Level Overview
Equities & Real Estate
U.S. stocks finished November slightly higher after rallying with five consecutive up days in the S&P 500. The end of the longest U.S. government shutdown on record brought a sigh of relief to many, though it did not lead to another new all-time high in the index. Despite the tempered gains, trends remain positive, and as a result our portfolios remain fully allocated while also carrying exposure from weaker real estate securities.
Just like their U.S. counterparts, international equities retraced slightly but failed to seriously challenge their uptrend status. For now trends remain firmly positive as we head into December. The relationship between foreign developed and emerging markets is relatively balanced in terms of strength so both will be at their baseline allocation in our portfolios.
Real estate securities remain mixed, with some indexes in slight uptrends and others in full downtrends. The cloudy picture in terms of trend and the distinct weakness relative to other equity-like assets means that our portfolios will continue to hold a minimal position. Until conditions improve or monetary policy becomes more accommodating, this is unlikely to change.
Fixed Income & Alternatives
U.S. fixed income trends have strengthened in intermediate- and longer-duration Treasuries. These trends remain solid and continue to look stronger than the short-duration segments that dominated much of the post-COVID period. The added diversification and resumed, persistent uptrends have been a welcome development for investors, including our firm. The presence of positive trends means an overweight allocation for our portfolios.
For international bonds, they declined further in November, enough to produce downtrends. As a result, exposure will be vacated and re-allocated to stronger U.S. Treasuries.
Within the multi-asset trend alternatives bucket, fixed income duration continues to increase as intermediate-term bonds perform better. Exposure to shorter-term bonds is decreasing as yields fall. Net long exposure in commodities has grown as existing positions strengthened, with the largest long now concentrated in the metals segment. The U.S. Dollar’s slight rebound has caused international currency exposure to decrease; however, the portfolio is still net short the U.S. currency.
Sourcing for this section: Barchart.com, S&P 500 Index ($SPX), 11/1/2025 to 11/28/2025
3 Potential Catalysts for Trend Changes
Purchasing Slow Down:
Consumers, who are increasingly stretched, are drawing a line on what they will pay for a new vehicle, according to dealers, analysts, and industry data. Signs of strain are evident: cars are sitting longer on dealer lots, dealers are offering additional discounts, lower-income borrowers are defaulting on car loans, and total spending on vehicle purchases is down. Auto tariffs, persistent inflation, and a tighter job market are driving more Americans to reconsider major purchases. For example, within housing, October’s selling rate was the slowest in more than a year, and November results — soon to be announced — are projected to be lower, with no quick rebound expected.
Delayed Data:
Government statistical agencies are playing catch-up after the shutdown ran from Oct. 1 to mid-November, delaying many reports economists and policymakers rely on to measure the health of the economy. September inflation data will be almost three months old when the Fed meets Dec. 9-10, but that will be the most recent official inflation data available as they weigh how to steer interest rates. The official Personal Consumption Expenditures inflation report is scheduled for Friday, Dec. 5. Some economic data, such as last month’s unemployment rate and consumer-inflation numbers, can’t be compiled retroactively because they rely on contemporaneous surveys, according to the Labor Department. October job-creation stats are due in December, but not until after the Federal Reserve meets. The Commerce Department will publish its initial estimate of third-quarter GDP on Dec. 23, nearly two months after a first look at the data was initially scheduled.
Next Cut?
According to a Federal Reserve report, the job market continues to struggle even as cost and price pressures persist. The findings underscore the competing risks central bank officials will have to weigh at a their next meeting. The Fed is split on what to do at its Dec. 9-10 meeting, with some officials preferring a third-straight quarter-point rate cut due to the slowing labor market and others wanting to hold rates steady because of inflation. Markets are putting an 85% probability on a cut, according to CME Group. The same Federal Reserve report found that wealthier Americans continued to drive solid sales at higher-end retailers, but otherwise consumer spending is under pressure. Many companies say shoppers are less willing to accept higher prices now as household budgets tighten.
Sourcing for this section: The Wall Street Journal, “U.S. Home Prices Slow Further Amid Affordability Concerns,” 11/25/2025 and The Wall Street Journal, “Five Key Takeaways From the Fed’s Economic Survey,” 11/26/2025
Trend Following Case Study: Treasury Bills
“When you can’t change the direction of the wind - adjust your sails.” – H. Jackson Brown Jr.
Approximately two years ago, U.S. Treasury bills and money market funds were enjoying a renaissance. Yields surpassed 5 percent and the risk-free rate of return was at a level not seen in almost two decades. The rebound in yield was enough to have investors looking away from other traditional assets, like stocks and bonds, in favor of these relatively high yielding but stable instruments. Never mind that inflation was eroding almost all of this higher yield…the idea of a riskless 5%+ was alluring.
Now, as yields are back below 4% and potentially set to fall further, investors must ask themselves: is this enough to continue being a suitable substitute for other assets. If so, for how long? If not, is now the time for bonds? Stocks?
This conundrum represents much of the reason Sparta Wealth Partners strategies still exist and continue to offer a solution for investors asking these questions.
Recall the recent journey through the interest rate landscape:
Like most strategies utilizing fixed income, our portfolios enjoyed the mostly falling rate environment until 2021, when the Fed’s primary concern shifted from stimulating growth to combating inflation.
Once the central bank began raising rates, bond prices in any interest-sensitive segment fell significantly, producing bear market drawdowns typically only seen in equities and other higher-volatility assets. Our systematic investing process picked up on this change in direction quickly, causing our portfolios to reduce exposure to higher-duration instruments and allocate to lower-duration assets, like T-bills, which benefited from this new direction by the Fed. In fact, for large stretches of late 2021 through 2023, T-bills were our largest position.
As higher-expected-return assets recovered, we shifted allocations toward them and lowered exposure to T-bills.
The problem this interest rate journey creates for investors who don’t use a trend-following system to dynamically make portfolio updates is that:
While T-bills provided a decent return, they have significantly lagged other assets
Now, with yields back down, investors who want to wade back into equity and bond waters risk doing so at all-time and local highs
Without a plan this can represent a sticky situation.
By contrast, our trend-following systems shifted into T-bills when higher-duration bonds were in downtrends, and then rotated back into risk assets as those trends turned positive. This helped us avoid the same opportunity cost.
Fortunately, it’s never too late to utilize a good investing system to venture back into higher-volatility markets, in our view. If investors work with us to develop a solid plan, then partnering with Sparta Wealth Partners means that even if this turns out to be relatively poor timing to move on from T-bills in favor of stocks and bonds, our investing systems will adjust accordingly and wait for the next opportunity. If the good times keep rolling as we enter 2026, then investors should be happy they took the incremental risk.
With gratitude on everyone’s mind this time of year, we’re reminded of how thankful we are for our systematic investing process. Markets bring uncertainty every day, and a defined plan is what allows us to move through it with confidence. It isn’t perfect — no approach is — but it has consistently helped us navigate whatever comes next for us and our clients.
As we close out this update, we want to thank you again for your partnership and wish you, your families, and your clients a great holiday season and a strong finish to 2025.
Important Information:
Sparta Wealth Partners is an investment advisor registered pursuant to the laws of the states of Florida, Georgia, Illinois, New Jersey, North Carolina, and Virginia. Our firm only conducts business in states where licensed, registered, or where an applicable exemption or exclusion is afforded. This material should not be considered a solicitation to buy or an offer to sell securities or financial services.
The investment advisory services of Sparta Wealth Partners are not available in those states where our firm is not authorized or permitted by law to solicit or sell advisory services and products. Registration as an investment adviser does not imply any level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. For more information, please visit adviserinfo.sec.gov and search for our firm name.
Past performance is not indicative of future results. The material above has been provided for informational purposes only and is not intended as legal, tax, or investment advice or a recommendation of any particular security or strategy or of any particular strategy or investment product. The investment strategy and themes discussed herein may be unsuitable for investors depending on their specific investment objectives and financial situation.
Opinions expressed in this commentary reflect subjective judgments of the author based on conditions at the time of writing and are subject to change without notice. The above commentary is for informational and educational purposes only and should not be construed as investment advice or a recommendation to buy or sell any security. Not intended as legal or investment advice or a recommendation of any particular security or strategy.
Information obtained from third-party sources is believed to be reliable though its accuracy is not guaranteed.
No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission from Sparta Wealth Partners.
An index is an unmanaged portfolio of specific securities. The performance of which is often used as a benchmark in judging the relative performance of certain asset classes. It should not be assumed that past performance in any way relates to future results. An investment cannot be made directly in an index. An index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown.
S&P 500 Index: A widely used U.S. equity benchmark. It contains 500 U.S. stocks chosen for market size, liquidity, and industry group representation.
Comments