Hello!
I hope this message finds you well. As we move through 2025, markets have seen an uptick in volatility, and we wanted to take a moment to address common concerns and offer some perspective on what we’re watching — and how we’re responding.
First and foremost, it’s important to remember that market fluctuations are a natural part of long-term investing. While the recent turbulence can feel unsettling, our focus remains on your long-term financial goals. We have carefully structured your portfolio with diversification and risk management in mind, with the goal of helping you navigate these periods with resilience. We feel strongly that anticipation and preparation are more powerful than any reactive adjustments after volatility has already picked up, and have made the following portfolio adjustments over the past 24 months in anticipation of the current environment:
- The addition of select alternative investments where appropriate, which are generally more insulated from public market volatility (e.g., Morgan Stanley Structured Notes and CIM Real Asset and Credit Fund)
- Extension of bond duration, allowing your fixed income holdings to respond more effectively to current interest rate dynamics
- Removal of small-cap equities, which can exhibit higher downside volatility in turbulent markets
- Reduction of international equities relative to U.S. equities, as a measure to mitigate volatility stemming from global trade and geopolitical tensions
Historically, markets have experienced ups and downs, but they have also shown a consistent tendency to recover and grow over time. We are continuously monitoring the situation and evaluating opportunities to ensure your investments remain aligned with your objectives. Periods of volatility can also create opportunity — whether through disciplined rebalancing, selective buying, or tax strategies. We continue to look for these windows on your behalf. Currently, we are keeping an extra close eye on the following dynamics as we plan for the remainder of 2025:
- The Fed and its path for interest rates, which could have significant impacts on loan, savings, and interest rates – as well as the value of bond investments.
- Inflation risks, which could cool the economy further – including potential changes to immigration policy, geopolitical tensions, trade relations, and the relative purchasing power of the US dollar.
- Trade policy, as much of the projections for markets in 2025 are highly dependent on the outcome of tariffs/trade wars.
Staying the course during turbulent times is one of the greatest challenges — and potentially greatest advantages — of being a disciplined investor. We’re here to help you do just that.
If you have any questions or would like to discuss your portfolio in more detail, please feel free to reach out. Your financial well-being remains our top priority, and we are here to support you through every phase of the market cycle.
Thank you for your continued trust and confidence.
Jake Fromm | Chief Investment Officer, CFS® | It is our mission to help you think differently about your wealth so you can LIVE WELLthy™ today and tomorrow.