Brent Schutte, Chief Investment Officer at Northwestern Mutual Wealth Management, has issued a warning that investors are "once again pushing the market higher" by flocking to the "Magnificent Seven" tech giants and unprofitable technology stocks, a strategy he views as shortsighted. Instead, the strategist recommends investors "hold some commodities" to hedge against what he perceives as increasingly persistent inflation risks. Schutte shared these insights during a recent interview, where he discussed the possibility of "economic broadening," which could favor small- and mid-cap stocks over the mega-cap tech names that have dominated markets in recent years. He noted that this shift began last October when several large companies reported earnings and the Federal Reserve cut interest rates, prompting investors to look beyond traditional market leaders. Schutte described the valuation gap between large-cap and small-cap stocks as striking. He pointed out that the S&P 600 trades at a price-to-earnings ratio of about 14 to 15 times with an expected growth rate of around 17.5%, while the S&P 500 trades at 21 to 22 times earnings for similar growth. "I like to trade with valuation on my side because it helps get me out of trouble," he stated. Regarding portfolio construction, Schutte believes the traditional 60/40 stock-bond allocation model needs to evolve. "You need to hold some commodities," he advised, warning that inflation may be more of a "permanent feature" than transitory, as it has remained above the Fed's 2% target for five years. The strategist outlined several risks ahead, including excessive labor market growth concentrated in healthcare services and the potential for renewed tariff increases. He also highlighted uncertainty surrounding Federal Reserve leadership, describing Washington discussions about a potential appointment of Kevin Warsh as Fed chair as a "soap opera" that could push monetary policy in unpredictable directions. Beyond short-term volatility, Schutte remains focused on assets that are "underinvested" and "undervalued" by the broader market. His long-term strategy centers on seeking value in cheaper sectors, while acknowledging that near-term uncertainty remains elevated due to economic softness and geopolitical conflicts.