Welcome to our early July 2025 market and economic update! With markets at all-time highs, there is a lot for investors to be optimistic about. However, it’s equally important to stay focused on long-term investing goals.
As President Eisenhower is often quoted as saying, “what is important is seldom urgent and what is urgent is seldom important.” This applies perfectly to today’s market environment. Investors are facing a constant stream of seemingly urgent news – from trade policy to geopolitical tensions, and more.
First, it’s important to put the current market all-time highs into perspective. Since markets tend to rise over long periods, bull markets spend much of their time setting new records.
Let’s look at the numbers. From 2013 to 2024, the average year saw 37 new all-time highs for the market – that’s about 15% of all trading days. As the chart shows, last year alone brought 57 record closing days, despite concerns about recession and election uncertainty.
New record highs can make some investors nervous. Some may wonder if they should wait for a pullback before investing. While market declines are inevitable, trying to time these movements can backfire. The cost of waiting for the perfect moment to invest is often higher than simply getting started.
Next, the rebound in markets is not just in stocks, but across other asset classes as well. For instance, corporate bonds have also delivered impressive results. This is because credit spreads have been tightening significantly. In simple terms, this means the interest rates on corporate bonds have fallen relative to Treasury yields, which pushes bond prices higher. This tightening of credit spreads signals that the flight-to-safety behavior we saw earlier this year has largely subsided. Lower credit spreads benefit the broader economy by making it easier for companies to access capital, fund new projects, and refinance existing debt.
For investors, this serves as an important reminder that diversification matters. While the stock market captures headlines, multiple asset classes have contributed to portfolio performance this year.
Finally, while strong market performance is encouraging for investors, it’s important to remember that building a portfolio goes beyond just chasing returns. Managing risk matters just as much. Recent market history provides valuable lessons about how different asset classes perform under varying conditions. Portfolios heavily weighted in stocks may shine during market expansions, but they also experience larger swings during downturns. Including the right allocation of bonds and other asset classes can help smooth out that ride, potentially helping you stay on track toward your financial objectives.
While markets have bounced back recently, maintaining disciplined portfolio management is more important than chasing recent performance. History consistently shows that staying invested through complete market cycles remains the most effective approach for achieving long-term financial success.
We hope you found these insights helpful. If you would like to discuss the stock market, fixed income, or your portfolio strategy in more detail, please don’t hesitate to reach out. We look forward to speaking with you. You can reach Jason Noble at (843) 743-2926.
