Let me tell you about Nikola Jokic, the Denver Nuggets’ skilled center, and basketball poet. Despite his impressive performance, he was unfairly overlooked and missed out on his third MVP recognition. Jokic’s numbers in the 2022-2023 season were exceptional – and he represents the most “value” any player in the NBA brings to his team. When Jokic is on the court, the team boasts an impressive +380 plus/minus* rating for the season. However, when he is not playing, their plus/minus rating drops to -201. His individual contributions are highlighted by his average plus/minus per game of +6.1. If the Nuggets performed at an average level without him, their win/loss record is projected at 58-24. However, without Jokic, their Net Rating plummets to -7.7, resulting in an expected win/loss record of 22-60, a significant decline of 36 wins. Although it’s disappointing that Jokic didn’t win his third MVP title, it’s crucial to recognize and appreciate the impact he makes, similar to the mega-cap group of $1T companies discussed below, and how it relates to the U.S. stock market. Likewise, when the five largest companies by market cap are removed from the S&P 500 we see a much different performance than we’re seeing right now…  A tale of two indexes:  On May 30th, Nvidia made headlines by joining the exclusive $1 trillion club for the first time. As a maker and designer of A.I. hardware and software, Nvidia achieved this remarkable milestone by raising its valuation by a staggering $280 billion or nearly 40% since May 15th. This extraordinary leap in value is unparalleled in the history of capital markets, although the company closed just below the trillion-dollar mark. However, there is a downside to Nvidia’s success, which reflects the overall trend of trillion-dollar companies this year. The five members of the Trillion-Dollar Club, including Apple, Microsoft, Google parent Alphabet, Amazon, and now Nvidia, have witnessed a synchronized surge in their market valuations. This surge among a select few has single-handedly propelled the S&P 500 index to +9% YTD. Without these “Super 7” (including Facebook and Tesla) the rest of the SP500 has moved less than 1% for the year. While the +9% move of the SP500 may seem positive at first, it raises concerns about the market’s dependency on these few mega-cap companies. The exorbitant prices they have reached may already be stretched to their limits, making it unlikely for them to sustain the market’s upward trajectory. The rise of Nvidia exemplifies the frothiness that has enveloped the Trillion-Dollar Club. The Trillion-Dollar Club has accounted for nearly all the gains made by the S&P 500 this year. Apple, Microsoft, Alphabet, Amazon, and Nvidia have each experienced significant increases in their market caps since January, with Nvidia leading the pack at a remarkable 176%. Together, the current members of the Trillion-Dollar Club have added a staggering $2.87 trillion to their combined market cap since the beginning of 2023. These were names that we were and in some cases still are bullish on, but the concern then comes from looming weakness in other parts of the market.  Interestingly, this rise is only slightly higher than the overall increase in the S&P 500, which stands at $2.98 trillion. Consequently, the Trillion-Dollar Club’s contribution amounts to 96% of the 9.5% year-to-date increase in the index. In essence, we can think of the Trillion-Dollar Club as a company called “Big 5 Llc”. This “company” has seen its valuation surge by 46.2% from $6.2 to $9.1 trillion. On the other hand, the remaining 495 companies in the S&P 500 have only experienced a combined gain of 0.3%.  Without the tremendous boost from the Trillion-Dollar Club, the S&P 500 would essentially be flat for the year. We have been bullish on these chip makers and tech companies for some time (examples below) but think the recent run is getting a little too exuberant and divorcing from the broader market.  Places where we discussed the potential in the AI and Chips group: The Bifercated Landscape of the “Technology” Group: Exciting Investment Trends to Follow The investment opportunity in semiconductors When does a Bear look like a Bull? The overwhelming weight of the Trillion-Dollar Club has made the S&P 500 lopsided. At the end of 2022, the club accounted for 17.6% of the S&P’s total valuation. Now, it represents 25.6%, meaning that more than one dollar in four is attributed to these mega-cap companies. As their combined market cap has increased by nearly $3 trillion in just five months, the Big Five have become significantly more expensive. Their overall price-to-earnings (P/E) ratio, which is the total valuation divided by combined net earnings, has risen from 27.7 to 40.6. This indicates that investors are receiving 33% fewer dollars in earnings for every $100 they invest compared to Christmas of 2022. To put it in perspective, the current P/E ratio for the Trillion-Dollar Club is almost twice that of the overall S&P 500. This situation is concerning, considering that the Trillion-Dollar Club has already achieved substantial earnings growth since the start of the pandemic. In 2022, these seven companies generated approximately $224 billion in net profits, which was 50% more than their pre-COVID earnings in 2019. Therefore, the high multiples at which they are currently trading come on top of potentially unsustainable profit levels. The concern from here is that any weakness in this small group would be felt significantly in the broader market.  This narrow leadership can be a good sign if the momentum becomes contagious and the cash on the sidelines is brought into the market. But while cash is so lucrative, the velocity at which the cash comes into a market expecting a recession is unlikely. However, three main risks persist: Interest Rate Risk – More Constrained Lending Coming: One significant risk in the current market is the potential for more constrained lending due to interest rate changes. When interest rates rise, borrowing becomes more expensive, which can lead to reduced consumer spending and business investment. Higher interest

Benefits of a 529 Plan in Colorado  A 529 Plan is a tax-free way to save for education, offering significant flexibility and growth potential. In Colorado, these plans come with added perks like state tax deductions of up to $34,000 and incentives for new parents and qualifying families. Funds grow tax-free and can be used for a wide range of educational expenses, from college tuition and expenses such as room and board, to vocational training and trade schools. The ability to change beneficiaries and even roll over unused funds into a Roth IRA makes a 529 Plan adaptable to different needs, making it a smart choice for long-term educational savings.  During my time as a 529 Specialist, I had the privilege of helping families set up these educational savings accounts, whether for newborns or children heading off to college. The more I learned about the flexibility and advantages these plans offer, the clearer it became how valuable they are for long-term educational planning. One of the most rewarding experiences I had was with a family who had just brought their first child into the world. I had the opportunity to work with grandma and grandpa, who wanted to fund their granddaughter’s college education. They were unsure of the benefits/costs of the 529 compared to other plans available, but after walking them through the features of a 529 plan, they decided to open one for the new baby, and open an additional 529 for their unborn second grandchild, just to take advantage of the tax-free growth over a longer time horizon.  What is a 529 Plan? A 529 Plan is a tax-advantaged savings vehicle designed to help families cover educational expenses such as tuition, fees, books, room, and board. It can be used for a variety of different expenses needed when pursuing both K-12 schooling and higher education. Contributions grow tax-free, meaning no taxes are owed on the earnings as long as the funds are used for qualified education costs. You can use 529 Plan funds at a wide range of institutions, including community colleges, public and private universities, vocational schools, and trade programs, offering great flexibility. When can you start investing?  The key to investment growth is simple: time in the market, not timing the market. For individuals planning to have children in the future, an option that is commonly overlooked is opening a 529 Plan in your own name before your child is born. By doing this, you can get a head start on investing and take advantage of tax-free growth early. Once your child is born, you can easily change the plan’s beneficiary from your name, to their name. This early start allows you to maximize the potential for investment growth, giving you more time to accumulate savings and build your portfolio. It’s an excellent way to begin preparing for your child’s future educational expenses before they even arrive.  Another key feature of this plan is the flexibility of beneficiary changes. If your child doesn’t use all the funds in their 529 Plan, or chooses not to pursue higher education, you can change the beneficiary to another eligible family member, keeping the savings and growth within your family. Alternatively, if you decide to return to school, the funds can be used for your own qualified educational expenses, or paying off your own student loans up to $10,000, giving you another way to take advantage of the plan’s flexibility. Additionally, as long as the 529 has been open for at least 15 years, you can roll over up to $35,000 of unused 529 Plan funds into a Roth IRA, providing another valuable option for long-term savings. For example, if your kiddo’s school ends up costing less than the funds you have saved in their 529, those funds won’t go to waste. You can still reap the benefits of tax-free growth and withdrawals from a Roth IRA. Keep in mind that non-qualified withdrawals may be subject to taxes and a 10% penalty on earnings. This flexibility makes a 529 Plan a great option not only for parents planning for their children’s future but also for individuals who want to invest in their own continued learning. Low Costs and High Contribution Limits Setting up a 529 Plan typically involves minimal fees, which are often lower than those of traditional investment accounts. Colorado residents can contribute up to $500,000 per beneficiary across all 529 accounts, making it possible to save significantly over time. There are no income restrictions, meaning anyone can participate and enjoy the benefits. In Colorado, the costs of a 529 plan can vary based on the specific investment options you choose. Here’s a cost comparison of the four different types of 529 plans offered in Colorado: Direct Portfolio (CollegeInvest Direct Portfolio Plan) Fees: Annual asset-based fees: Ranges from 0.22% to 0.46%, depending on the investment option (such as age-based portfolios or individual portfolios). Fund expense ratios: Between 0.02% to 0.43%. No enrollment or maintenance fees. Investment Options: There are thirteen different 529 investment options ranging from conservative to aggressive. This plan allows you to choose between Age-Based options, managed by a professional, or select your own portfolio .  These are not self directed plans, meaning you cannot hand pick your investments. You will be able to choose your risk-tolerance, and will be invested in a portfolio that aligns.  Overall Cost: The fees for this low-cost option are associated with investments, and allow investors to participate in market growth.  Stable Value Plus (CollegeInvest Stable Value Plus Plan) Fees: Annual asset-based fee: 0.34%. No fund expense ratio, as this is a guaranteed insurance contract, not a mutual fund or ETF. No enrollment or maintenance fees. Investment Options: There are no investment options, as this plan guarantees principal and return.  Additional Features: Provides guaranteed returns set annually and principal protection, making it a conservative, low-risk option. Overall Cost: This plan has low costs but is designed for more conservative investors seeking principal protection. Smart Choice (CollegeInvest Smart Choice College Savings Plan)