Quarterly Newsletter 2025 Q3
So far, investing in 2025 can be categorized in extremes. Extremely boring or extremely exciting. After a fairly benign drift lower in the first quarter due to high stock prices, April was very exciting due to the ‘Tariff Tantrum’ that drove stock markets down sharply only to recover by the end of June. Making the overall market about flat for the year.
The administration is touting a new ‘golden Age’ while the opposition is forecasting complete economic and social destruction. Mainstream press and social media are doing their best to sell the ancient motivators; fear and greed. History will likely prove once again that things won’t be as awful as the doomsayers believe nor as fabulous as the optimists are predicting. Based on our research, we anticipate fairly flat growth with a likely downturn sometime in the late 3rd or early 4th quarter. This is primarily due to slightly high stock prices and historic down markets during that time period. In other words, we don’t anticipate a recession or high growth throughout the rest of 2025 and probably 2026. With any good fortune, boring will continue to be the theme for a while. Rest assured that if we are surprised by unforeseen excitement, wether positive or negative, Navigate Private Wealth LLC ‘Risk Allocation’ models are designed to take advantage.
2025 2nd Quarter Review
We stated last quarter that forecasting would be difficult. The easiest prediction was interest rate movement. We didn’t believe rates would drop, and they didn’t. Stocks were admittedly more difficult to predict. Ironically, unpredictability was a correct prediction. No one saw the tariff bomb coming that blew up stock markets for a few weeks. The positive outcome appears to be new trade agreements that should be less disadvantageous to the United States. An early positive indicator is the large amount of new tax revenue already generated from tariffs.
2025 3rd Quarter Preview
As mentioned above, the third quarter looks fairly boring. We can only hope that’s true. There are a few unknows that could affect the economy and financial markets. Primarily, unknow results of the new trade agreements and recent increases in tariffs. We see tariffs combined with the new tax cuts as a fundamental shift from income tax to consumption tax. The likely outcome could be increased prices on goods and services.
Bonds
The Federal Reserve has kept the lending rate constant at 4.50%. In spite of President Trump wanting the Federal Reserve to decrease the lending rate, we don’t see reason for it. The economy appears to be strong and lending rates are staying high. A decrease in rates could over heat the economy. On the other hand, if the economy should slow down, there is plenty of ability for the Federal Reserve to take corrective action. This is part of why we don’t foresee a recession any time soon.
Our view is that bonds should remain fairly flat and investors should expect to collect dividends rather than expect capital gains on bonds.
US Stocks
Due to a healthy economy and strong corporate infrastructure investment, we anticipate modest growth throughout the 3rd quarter. A surprise could happen if tariffs drive consumer prices higher due to renewing post-tariff inventories after liquidating pre-tariff product. That said, we don’t anticipate large price increases as corporations adapt to the new tax policies.
Consumers remain fairly strong in spite of running out of stimulus payments from the early 2020s. This fits with our overall view of boring markets.
International
We have been underweight international stocks since November of 2021. This strategy has worked out really well for our clients. International stocks outperformed the US stock market in the first quarter of 2025 and have been fairly flat since. Our concern is buying international stocks too late and missing some upside. That would mean we gave up the advantage we gained over he past 3.75 years. A decreasing dollar relative to foreign currency should also be positive for international stocks. While we have not increased international holdings, we are studying it very closely.
Did You Know?
Utah residents save more for retirement than the national average.
According to recent data, Utahns contribute over 10% more on average to retirement accounts than the typical American. That’s great news—but with rising life expectancy and inflation, staying on track still takes regular check-ins and smart planning.
Have you reviewed your retirement strategy this year? We’re here to help.