June 30, 2025
"Market forecasters will fill your ear but will never fill your wallet."
As the financial markets approach the end of 2025’s first half, a sense of unease and uncertainty clouds the summer investment outlook. U.S. stock indices have experienced a bumpy ride with little upside progress. One would have to be on Mars not to be aware of the combustible macroeconomic and geopolitical environment. Daily happenings in Washington D.C. dominate the news flow and influence the daily trend of the global stock, bond, currency, and commodity markets. This phenomenon is unusual. Traders tend to absorb and discount news quickly. Not so today, because everything seems up in the air – Iran, tariffs, the “Big Beautiful Bill,” and do not overlook – Federal Reserve monetary policy. Algorithms cannot model dysfunction.
Back in early April, the U.S. stock market tanked in response to President Trump’s initial tariff barrage. Investors were rattled by the rollout’s harsh tone and shoot from the hip nature. The decline at its worst possessed many characteristics of a classic Wall Street panic, which feels like a freefall and is short-term in nature. At their recent lows, the S&P 500 and Nasdaq Composite indices plunged 18.9% and 24.7%, respectively.
Panics also generate extreme levels of investor pessimism. This was the case in April. Successful investing requires the awareness that ideal buying opportunities occur when fear is abundant. Here at Withum Wealth Management, we monitor indicators that track investor sentiment. In April, key gauges registered levels of gloom exceeding those present during the pandemic induced crash in March 2020. Buyers back then were rewarded bigtime. In fact, investors do not need to attempt anything particularly sophisticated to measure pessimism. Think bullish when a falling stock market leads off the evening news or lands on the front page of a non-financial publication. For example, the following headlines were featured within days of the recent April low: “Market Carnage Worsens”, “Trumps’s Tariff Push Sends Markets Reeling”, “Market Turmoil Spreads Across Globe”, and “Massive Selloff Batters Buyers on Dip.”
Stocks have now rebounded, with benchmark U.S. indices hitting fresh record highs. We would all love to know how the markets will respond throughout the remainder of the year. The reality is no one knows. Our job is to focus investment strategy on the distant future. Investors today, bombarded with the short-term outlook, lose perspective. Financial networks attempt to lure advertisers and viewers 24/7. As the old saying goes, these talking heads may not forecast well, but they forecast often. Common sense advice like “buy and hold’ does not sell Skyrizi.
Investors also need to recognize that doom is more seductive than optimism. Pessimism can be contagious. Witness the current environment. History’s greatest investors, like Warren Buffett cited above, tend to possess a rational positivity. They capitalize on market volatility, pay attention to investor sentiment, and accumulate attractive assets when the price is right. At Withum Wealth Management, our competitive advantage is a disciplined long-term strategy and a reliance on the time-tested powers of portfolio diversification and rebalancing by name, asset class, and sector. So, this summer, we recommend that you take a swim and tune out the babble.
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