2025 First Quarter Commentary Report
Market Review April 10, 2025
Global Market Performance
The first quarter of 2025 gave markets plenty to process. As you may have noticed, there was both bad and good news.
Let’s start with the bad news:
Uncertainty around U.S. tariff policies has weighed heavily on equity markets. Growth stocks like Nvidia and Tesla were hit the hardest, suggesting an overall risk-off environment.
Now the good news:
Diversification is paying off. While the U.S. stock market declined, international markets performed well, helped by strong European defense stocks and a weaker U.S. dollar. Even within the US market, Large Cap Value stocks ending the quarter in positive territory.
Market Returns (Q1 2025):
U.S. Stocks: –4.72%
International Developed Stocks: +6.20%
Emerging Market Stocks: +2.93%
Global Real Estate Stocks: +1.37%
Bond Markets
Concerns about tariffs and their potential impact on economic growth helped push interest rates lower in the U.S. and Canada. Interest rate movements elsewhere were mixed. Bonds have helped cushion the volatility in stocks, especially with higher starting yields giving them more room to absorb shocks.
Bond Returns (Q1 2025):
U.S. Bond Market: +2.78%
Global Bonds (ex-U.S.): –0.17%i
Planning Perspective
Bill often says: “Investing is like sailing. It’s largely boredom, punctuated by moments of sheer terror.”
The announcement of steeper-than-expected tariffs on April 2nd created one of those moments. The long-term impact depends on how global trade negotiations unfold. The best-case scenario is mutual relaxation of tariffs through diplomacy. But the longer tariffs remain, the more they can raise prices and slow economic growth.
The encouraging part is that, unlike past crises like COVID or the Financial Crisis, this situation is self-inflicted—and thus, reversible. In fact, when some of the tariffs were scaled back on April 9th, markets rebounded sharply. However, we expect continued volatility as policy decisions unfold.
Market swings like this aren’t unusual, and it's important to always be financially and mentally prepared.
A few key reminders:
Market volatility is normal.
Historically, intra-year stock declines average 14%—even in years with positive returns. Staying invested is critical, as the biggest gains often follow the steepest drops.
When in doubt, zoom out.
Over time, disciplined investors in both equity and bond markets have been rewarded. Equities come with more ups and downs but also offer higher long-term returns.
Know your risk level.
Everyone has a unique risk tolerance. Your portfolio should match yours.ii
If you’re still saving for retirement, market pullbacks like this may offer buying opportunities. Keep investing consistently, knowing you're buying at a discount. Make sure your emergency fund is at a comfortable level. For younger savers, we usually recommend concentrating higher-risk assets (like stocks) in retirement accounts, and lower-risk ones (like bonds) in brokerage accounts.
If you're retired, consider how much of your portfolio is in bonds or cash to cover withdrawals. We typically aim for 10 years’ worth, aligned with your portfolio’s risk level.
In the meantime, we’ll look to rebalance portfolios when asset allocations drift from their targets. If there are losses in taxable accounts, we may use tax-loss harvesting, replacing sold investments with similar ones. These decisions are made on a case-by-case basis.
Personal Perspective
For the past two years, my wife and her friend have led an effort to revamp our neighborhood playground. The city contributed the bulk of the funding, and they’ve been raising the rest. One of their big fundraisers is a community 5k. As a company, we were happy to sponsor it, which is about the extent of our advertising.
So, one chilly Saturday morning in February, the whole team showed up to run. It was my first time attempting to run a 5k, and I hadn’t exactly trained. Just before the race, I asked a friend who ran competitively in college for advice. He told me, “It’s all about finding your pace. The worst thing you can do is stop before the finish line.” I spent the next 3.1 grueling miles contemplating that sage wisdom.
You’ve probably heard the old saying: “Life is a marathon, not a sprint.” Investing is no different. So far, 2025 has shown us the importance of finding your pace. Your “pace” is your personal financial strategy—how much you save, your level of investment risk, and your withdrawal strategy. The key is sustainability. We all want to live well, save enough, invest wisely, and retire securely. Finding the right balance is essential. Successful investing takes patience, consistency, and endurance; all of which are easier when you find your pace.
Bill, Abby, Diane, and her dog happily walked the 5k. Grainne has been training for a half marathon and has a slightly faster pace… We are proud to report she placed 1st in her age bracket! I, on the other hand, finished 17th, and very, very out of breath. I am pretty sure there were more than 17 runners in my age group…but I’m not about to confirm that.
“A genius is the man who can do the average thing when everyone else around him is losing his mind.”
-Napoleon Bonapart
Sincerely,
Myles B. Brandt, M.S., CFP®
[i] Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio.
Market segment (index representation) as follows: US Stock Market (Russell 3000 Index), International Developed Stocks (MSCI World ex USA Index [net dividends]), Emerging Markets (MSCI Emerging Markets Index [net dividends]),
Global Real Estate (S&P Global REIT Index [net dividends]), US Bond Market (Bloomberg US Aggregate Bond Index), and Global Bond Market ex US (Bloomberg Global Aggregate ex-USD Bond Index [hedged to USD]). S&P data © 2024
S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. MSCI data © MSCI 2024, all
rights reserved. Bloomberg data provided by Bloomberg.
[ii] https://www.washingtonpost.com/climate-environment/2024/10/03/flood-insurance-program-hurricane-helene/
[iii] https://www.latimes.com/business/story/2025-01-12/california-homeowners-are-getting-cancelled-by-their-insurers-and-the-reasons-are-dubious