22 NEBRASKA CATTLEMAN November 2025 FINDING OPPORTUNITY IN CHALLENGING MARKETS JOHN DARWIN, CFA | RELATIONSHIP MANAGER AT BRIDGES TRUST By most metrics, the last three years in equity markets have been historic. As of the end of August 2025, the S&P 500, an index that tracks the largest 500 companies in the U.S. stock market, has returned 19.54 percent per year over the last three years.1 To put that number in context, this three-year period for stock performance ranks better than 80 percent of observations dating back to 1985.2 It’s not just equities that have been on a run, however. Despite ticking down for the first time in six years this year, the nominal all-land average value per acre for farmland in Nebraska is up 7.6 percent annually since 2020 and, as our clients across the state know first-hand, cattle prices have also moved favorably over that same period.34 It seems that everywhere we look, things are getting more expensive. All of this is happening against a backdrop that feels grim for many Nebraskans. Commodity prices have dropped precipitously after a few good years in the early 2020s5 and tariffs appear to be having a chilling effect on crop exports. A recent study commissioned by the Aksarben Foundation found that Lincoln and Omaha’s economies are growing at a much slower rate than comparable cities, and the entire state’s Q1 2025 GDP growth ranks last among all states in the nation.6 The proverbial wall of worry is high and growing. DIFFICULT DECISIONS At Bridges Trust, we’re committed to helping families plan for multi-generational wealth transfer. We’ve heard the saying that families go “shirtsleeves to shirtsleeves” in three generations. Whether because of poor tax planning, a lack of communication among family members or misguided decisions about where to invest and how to spend, many families fall victim to diminishing wealth as the years drag on. This problem can be particularly acute for farmers and ranchers whose primary form of wealth is the land they work on. Mapping out a plan to ensure future generations of your family are provided for is complicated enough for those whose net worth is made up of liquid assets like equities and cash. It’s a different beast entirely for Nebraskans with land-heavy balance sheets and limited liquidity. Many of today’s cattle producers are in the fortunate position of generating income, sometimes in sizeable amounts, thanks to the market improvement already mentioned. And yet, as costs to expand herds have increased and assets seem to continue appreciating, the decision about where to invest – Buy more land to expand? Purchase more liquid assets? – is becoming increasingly difficult. A BALANCING ACT As someone whose primary responsibility is allocating capital on behalf of clients, I believe all successful outcomes involve balance. The ideal asset allocation for a given family ought to effectively walk the line between ensuring the best possible chance for success in that family’s objectives while not taking on an unnecessary amount of risk. Risk, of course, takes many forms. For cattlemen and women, a land-heavy balance sheet can cause problems when the landowner passes away and children do not have enough cash to pay taxes or administer the estate – what we’d call a liquidity issue. (Assuming it’s even their desire to stay in the cattle business.) Short-term volatility in equity prices can cause a cash crunch or have serious long-term opportunity costs for those who feel compelled to exit the market as a result. And inflation, which impacted all households coming out of the pandemic and is rearing its ugly head again this year, is a constant headwind to the maintenance of wealth over longer periods of time. To understand just how persistent inflation is – and to better frame why it’s top among our concerns, alongside liquidity, when helping families plan for the future – let’s refer to some of the same markets we cited earlier. Accounting for inflation, that same 7.6 percent annual growth in land value since 2020 is just 3.9 percent, nearly four percentage points lower than the nominal value. The 10-year compound growth rate, a measly 1.9 percent in nominal terms, is actually negative after taking inflation into account.7 What about other places to allocate funds? Since 1975, inflation has, on average, shaved a hair under 4 percent off the annual return of the S&P 500 – a number that sounds like a lot until you realize that the real, after-inflation return of the index PERSPECTIVES
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