Second half of 2025
Well that was quite an eventful first half of the year. As I wrote in my previous Ken’s Korner, I expected increased volatility and asset allocation to be more important in the coming years. That proved quite accurate as the S&P 500 dropped 19% by early April before rebounding over 20% by the end of June to all-time highs. Despite making new highs, the EURO 50 Index outperformed the S&P 500, up 8.4% verses 5.4%.
Asset allocation has indeed been very important this first six months of 2025 as U.S. Large Cap Value stocks greatly outperformed Large Cap Growth the first four months. Large Cap Growth outperformed from there, while many international markets outperformed the U.S. indices. Fixed Income also provided decent returns the first half as inflation mostly moderated.
Uncertainty was the word of the first two quarters as proposed high tariffs on nearly every global trading partner led to the previously mentioned 19% skid. The pausing of most of the tariffs then led to the sharp relief rally. In addition, earnings have held up well and that’s what drives stock market returns longer term. Looking ahead to the second half of the year, higher highs are most likely shorter term, but volatility will continue. I believe maintaining a diversified portfolio of large cap growth and value stocks, along with mid and small cap stocks, international equities and fixed income should help lower volatility some. Reviewing one’s risk tolerance after this first half should help define each investor’s proper asset allocation.
Now that the S&P 500 trades at over 22x earnings, expect volatility to continue as investors grapple with these high valuations, wars and softer economic data, but also decent earnings, lower inflation and trade progress. The potential positives can change quickly, even with a “tweet”, so investors need to be diversified and cognizant of the many risks still remaining.
Our team greatly appreciates the trust and confidence of our client relationships. We will continue to strive to maintain this trust by providing our individualized investment and retirement plans. While we remain somewhat cautious, several areas in the marketplace do offer value. We look forward to those discussions with our clientele.
Best Regards,
Kenneth M. Lampos
Senior Vice President, Investments
Wealth Management Specialist
Any opinions are those of Kenneth M. Lampos and not necessarily those of Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the forgoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance is not indicative of future results. Diversification and asset allocation does not ensure a profit or protect against loss. Holding investments for the long term does not ensure a profitable outcome. Dividends are not guaranteed and must be authorized by the company’s board of directors. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The Euro STOXX 50 index is a market capitalization weighted stock index of 50 large blue-chip European companies operating within Eurozone nations. Components are selected from the Euro STOXX index which includes large-, mid- and small-cap stocks in the Eurozone. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary.
