2025 Has Been a Boring Year

Imagine you went to sleep on New Year’s Eve and just woke up today. With no concept of what has transpired over the past few months, you pull out your phone to get up to speed. Among the first things you check is the stock market. How do you think you would feel?

Your first reaction? Pure disappointment. For two consecutive years, the market has been on a tear, with an average annual return of 26%. That is more than 2x the long-term historical average return. While you were expecting to see more of the same, the S&P 500 is only up 0.1% so far in 2025. Must have been a uneventful start to the year!

S&P 500 Index Closing Price:

12/31/2024: 5,882

05/13/2025: 5,887

Of course, for those of us who have been awake, 2025 has been anything but boring. The market posted a nearly 5% return in the first 6 weeks of the year. As tariffs began to dominate the headlines, the market dipped in a hurry. From February 19th to April 8hth the market plunged 19%, with more than half of those losses coming during the two days following the April 2nd tariff announcement.  

Heading into the year, economists and Wall Street strategists were broadly optimistic, buoyed by prospects of deregulation and a new tax bill. Few anticipated that tariffs would trigger a sudden market plunge. Those who did warn of doom and gloom did not predict the subsequent rapid recovery. This provides us with another good example of why it’s generally a bad idea to get carried away by short-term headlines.

While the rally from the mid-April lows is a welcome development, it’s important to remember that uncertainty remains. Much of the recent optimism has come from announcements of a delay in the implementation of tariffs. The purpose of these delays is to give time for negotiation. While these negotiations may ultimately bear fruit, such an outcome is far from certain. There is risk that volatility returns in full force.

Now is a good time to take a personal pulse check. How did this volatility make you feel? I think most investors fall somewhere on the spectrum below:

• Declining prices equal a buying opportunity
• This feels very uncomfortable, but if I stick to my plan, I’ll be fine in the long run
• This time is different, get me out now!

There’s nothing wrong with any of these reactions. Each one is completely valid, depending on your perspective and situation. If there is one positive from this experience, it’s that each of us has had the opportunity to see how we respond under intense market pressure. If recent volatility made you uneasy, this may be a good time to revisit your asset allocation and ensure your plan still reflects your goals and comfort.

Source: MarketWatch

IMPORTANT DISCLOSURE INFORMATION