Market Review
The market returns from this past quarter are a telling example of why it is important to stay diversified when investing even though it can be tempting to chase returns in asset classes that have performed well in the past. Momentum can turn very quickly in either direction. Although U.S. equity markets were down, positive returns from other asset classes in our model portfolios netted out the losses.
Large US Company Stocks (S&P 500) were down over 4% with significant influence from the “Magnificent Seven” tech stocks which were down over 15%. These stocks have been darlings for several years, and were expensive heading into 2025. Their valuations, while still high, have come back to earth.
International developed stocks performed well in the quarter, returning about 7%, as European countries were galvanized to increase defense spending to become less reliant on the U.S. in protecting them from Russian aggression.
Fixed income continued to provide yield and helped offset losses in the U.S. equity markets with the Aggregate Bond Index returning 2.78%. With the federal funds rate remaining steady for now, we expect yields from our fixed income allocation should stay around 4% in the near term.
Dealing with Volatility
So far in 2025, the markets have been extremely volatile, in large part because of games the Trump administration has been playing with tariffs. The global tariff pronouncement on April 2nd was the latest and largest example of this and investors did not look favorably on how these tariffs were likely to affect the worldwide economy. There is considerable uncertainty about the true intent of the tariffs –whether they are meant as a negotiating tool or as a long-term strategy for the US– which has only added to volatility in the markets.
President Trump has almost embraced his tariff proposals having a negative impact on the markets or causing a recession in 2025 saying that a “little pain” is necessary in the short-term to achieve his long-term goals for the U.S. economy. A concern is that a recession will become a self-fulfilling prophecy if consumers and business pullback on spending worried about what the future holds.
Prior to the announcement of the April 2nd tariffs, the Fed extended its wait-and-see posture on interest rates, believing that inflation will persist or possibly increase with pressure from tariffs. The Fed will most likely wait several months to see how the new tariffs play out before making any decisions on interest rates. The underlying issue of who will ultimately bear the additional “tax” – producers, supply chain, or consumers – will have bearing on how inflation and recession unfold.
During times like these it is understandable to be anxious about the markets. But the best course of action is to stay invested and fight off the temptation to get out of the market or try to make large changes in your allocation. Volatility is a normal part of investing and the price we all pay for positive long-term returns. Events and policies can change very quickly. History informs us that jumping to the sidelines when the future looks bleak most often results in being left behind when things turn around.
Closing Thoughts
Tune out the Noise, an 88-minute film created by Academy Award-winning director Errol Morris, highlights the careers of David Booth and Rex Sinquefield, the founders of Dimensional Fund Advisors is now available online for free on YouTube. The film looks at the DFA origin story and why Rex and David thought they could tweak the index fund strategy to capture premiums and improve investment returns while still passively investing in a broad basket of securities. David Booth (who is a billionaire) probably had a hand in financing the movie but it is a good watch and not a 90-minute commercial for DFA. The documentary provides a very accessible refresher of the underlying principles that form the foundation of Milestone’s investment strategy. Our strategy is rooted in the science of investing, not in the emotions of fear and greed that so frequently trigger poor investment decisions.
The following table summarizes the performance of major asset classes through 03/31/2025:
Note: Return data obtained from Dimensional Fund Advisors database. Returns include dividends and reinvestments.
Regards,
The Milestone Team
Reminders
Please contact us if your financial goals or circumstances have changed or if we can address your needs. Also, please let us know as soon as possible about any change to your contact information.
SEC regulations require us to remind you to compare our reports with the statements provided by the independent custodian that holds your accounts (Fidelity). Please let us know if there are any discrepancies, or if you are not receiving separate statements (or notification of their online availability) directly from the custodian. Please remember that past performance does not predict future results.
Disclaimer: This is not to be considered investment, tax, or financial advice. Please review your personal situation with your tax and/or financial advisor. Milestone Financial Planning, LLC (Milestone) is a fee-only financial planning firm and registered investment advisor in Bedford, NH. Milestone works with clients on a long-term, ongoing basis. Our fees are based on the assets that we manage and may include an annual financial planning subscription fee. Clients receive financial planning, tax planning, retirement planning, and investment management services and have unlimited access to our advisors. We receive no commissions or referral fees. We put our client’s interests first. If you need assistance with your investments or financial planning, please reach out to one of our fee-only advisors. Advisory services are only offered to clients or prospective clients where Milestone and its representatives are properly licensed or exempt from licensure. Past performance shown is not indicative of future results, which could differ substantially.
Market Review
The market returns from this past quarter are a telling example of why it is important to stay diversified when investing even though it can be tempting to chase returns in asset classes that have performed well in the past. Momentum can turn very quickly in either direction. Although U.S. equity markets were down, positive returns from other asset classes in our model portfolios netted out the losses.
Large US Company Stocks (S&P 500) were down over 4% with significant influence from the “Magnificent Seven” tech stocks which were down over 15%. These stocks have been darlings for several years, and were expensive heading into 2025. Their valuations, while still high, have come back to earth.
International developed stocks performed well in the quarter, returning about 7%, as European countries were galvanized to increase defense spending to become less reliant on the U.S. in protecting them from Russian aggression.
Fixed income continued to provide yield and helped offset losses in the U.S. equity markets with the Aggregate Bond Index returning 2.78%. With the federal funds rate remaining steady for now, we expect yields from our fixed income allocation should stay around 4% in the near term.
Dealing with Volatility
So far in 2025, the markets have been extremely volatile, in large part because of games the Trump administration has been playing with tariffs. The global tariff pronouncement on April 2nd was the latest and largest example of this and investors did not look favorably on how these tariffs were likely to affect the worldwide economy. There is considerable uncertainty about the true intent of the tariffs –whether they are meant as a negotiating tool or as a long-term strategy for the US– which has only added to volatility in the markets.
President Trump has almost embraced his tariff proposals having a negative impact on the markets or causing a recession in 2025 saying that a “little pain” is necessary in the short-term to achieve his long-term goals for the U.S. economy. A concern is that a recession will become a self-fulfilling prophecy if consumers and business pullback on spending worried about what the future holds.
Prior to the announcement of the April 2nd tariffs, the Fed extended its wait-and-see posture on interest rates, believing that inflation will persist or possibly increase with pressure from tariffs. The Fed will most likely wait several months to see how the new tariffs play out before making any decisions on interest rates. The underlying issue of who will ultimately bear the additional “tax” – producers, supply chain, or consumers – will have bearing on how inflation and recession unfold.
During times like these it is understandable to be anxious about the markets. But the best course of action is to stay invested and fight off the temptation to get out of the market or try to make large changes in your allocation. Volatility is a normal part of investing and the price we all pay for positive long-term returns. Events and policies can change very quickly. History informs us that jumping to the sidelines when the future looks bleak most often results in being left behind when things turn around.
Closing Thoughts
Tune out the Noise, an 88-minute film created by Academy Award-winning director Errol Morris, highlights the careers of David Booth and Rex Sinquefield, the founders of Dimensional Fund Advisors is now available online for free on YouTube. The film looks at the DFA origin story and why Rex and David thought they could tweak the index fund strategy to capture premiums and improve investment returns while still passively investing in a broad basket of securities. David Booth (who is a billionaire) probably had a hand in financing the movie but it is a good watch and not a 90-minute commercial for DFA. The documentary provides a very accessible refresher of the underlying principles that form the foundation of Milestone’s investment strategy. Our strategy is rooted in the science of investing, not in the emotions of fear and greed that so frequently trigger poor investment decisions.
The following table summarizes the performance of major asset classes through 03/31/2025:
Note: Return data obtained from Dimensional Fund Advisors database. Returns include dividends and reinvestments.
Regards,
The Milestone Team
Reminders
Please contact us if your financial goals or circumstances have changed or if we can address your needs. Also, please let us know as soon as possible about any change to your contact information.
SEC regulations require us to remind you to compare our reports with the statements provided by the independent custodian that holds your accounts (Fidelity). Please let us know if there are any discrepancies, or if you are not receiving separate statements (or notification of their online availability) directly from the custodian. Please remember that past performance does not predict future results.
Disclaimer: This is not to be considered investment, tax, or financial advice. Please review your personal situation with your tax and/or financial advisor. Milestone Financial Planning, LLC (Milestone) is a fee-only financial planning firm and registered investment advisor in Bedford, NH. Milestone works with clients on a long-term, ongoing basis. Our fees are based on the assets that we manage and may include an annual financial planning subscription fee. Clients receive financial planning, tax planning, retirement planning, and investment management services and have unlimited access to our advisors. We receive no commissions or referral fees. We put our client’s interests first. If you need assistance with your investments or financial planning, please reach out to one of our fee-only advisors. Advisory services are only offered to clients or prospective clients where Milestone and its representatives are properly licensed or exempt from licensure. Past performance shown is not indicative of future results, which could differ substantially.
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