The second quarter was marked by stock and bond market returns that were not terribly significant. But market dislocation in early April was unsettling to investors and the gyrations were rather dramatic. The Standard and Poor’s 500 index fell nearly 14% in the first week of April as the President dug in his heels with regard to lifting tariffs. Shortly following that rapid selloff, the President delayed implementation of many of the tariffs in favor of returning to bilateral negotiations. The stock market responded favorably and headed back toward record high territory by the end of the quarter.
The bond market was strong in that first week of the quarter and acted as an effective portfolio buffer for the volatility in the stock market. But long-term interest rates headed higher as investors became concerned about growing Federal debt and deficits. The “big, beautiful bill” that is currently working its way through Congress is not expected to make a meaningful dent in the chronic budget deficits. All that said, inflation figures have been moderating further this year and the interest rate on the benchmark 10-year Treasury note was nearly unchanged for the quarter at about 4.25%.
There are signs that the financial markets are not facing the “all-clear” signal for the rest of the year. The economy has shown some signs of softening. The price of gold continued to rise in the quarter and the dollar has been weakening. These could be portents of either a slowing economy or elevated geopolitical risks, or perhaps both.
In our January Investment Review and Outlook, we proposed the notion that bonds could outperform stocks in 2025 as real yields have become increasingly attractive while rising stock valuations are growing to historically elevated levels. But we believe that no matter how bullish or bearish one is about stocks or bonds, one should never make wholesale changes in one’s asset allocation based on short term sentiment. It is always prudent to perform critical analysis of one’s portfolio’s strengths and weaknesses and to add or trim investments accordingly. But, once again, anyone who threw in the towel after the first week of April ended up paying a heavy price.
Estate Planning for the Masses
At Caplan Capital Management, we have been adding to our suite of services in recent years. Our focus on investment management has been core to our value proposition. But we have found that financial planning is greatly valued by our clients. It helps provide clarity and peace of mind for clients – but it also enables us to understand client goals more clearly and helps drive a more complete investment management process.
About a year ago we began receiving calls from clients regarding a potentially adverse change in the estate tax rules. While the election of Donald Trump allayed many of those fears, we have become focused on estate planning as an added service offering and how Caplan Capital Management can advise clients with many aspects of estate/legacy planning. Through our partnership with Mariner Independent Advisor Network, we are now in a strong position to bolster our estate/legacy planning capabilities. Even if you are not currently among the uber-wealthy class, there are many facets of estate planning that could prove indispensable to help you achieve all your financial goals. And it is never too early to begin the conversation. Please feel free to reach out to us should you wish to engage with us and to take advantage of any of our expanded and valuable services.
This article is provided for informational and educational purposes only. The information contained herein is not intended and should not be construed as individualized advice or recommendation of any kind. Where specific advice is necessary individuals should contact their professional regarding their circumstances and needs. Any opinions and forward-looking statements expressed herein are subject to change without notice. The information provided herein is believed to be reliable, but we do not guarantee accuracy, timeliness, or completeness. It is provided “as is” without any express or implied warranties. There is no assurance that any investment, plan, or strategy will be successful. Investing involves risk, including the possible loss of principal. Nothing herein should be interpreted as an indication of future performance. Past performance is no indication of future results. Investment Advisory Services are offered through Mariner Independent Advisor Network (MIAN), an SEC Registered Investment Adviser. Caplan Capital and MIAN are not affiliated entities.