April 2025 Update
It is with bittersweet congratulations that we announce the well-deserved and richly earned retirement of one of our amazing team members, Beth Bell. Beth will be retiring on Tuesday, April 8, 2025. She is an amazing asset to our work family and our client families and will be sorely missed. Beth and her husband, Rick, have some fantastic travel plans, and we look forward to hearing about all of their adventures.
With the markets experiencing volatility, I wanted to provide a brief update since my last note to you. Tariff policy uncertainty continues to heighten the situation. Stock investors have a logical reason to be frustrated: tariffs have the potential to simultaneously increase inflation and slow economic growth.
Memorable news headlines are unlikely to abate anytime soon. Both business and investor confidence has eroded somewhat. What was once widely viewed as a thriving economy, with accelerating growth prospects due to the potential of deregulation and tax cuts, has been replaced with concerns of recession and inflation. In my opinion, the crowd may have become too pessimistic.
The economy is still generating growth even after the cost of capital has increased significantly from the interest rate hikes. The employment market is cooling from white-hot levels, although still healthy. The U.S. consumer remains in fairly good shape, especially at the higher end. Inflation remains my primary concern, as it is a little hot and likely remains so for structural reasons for a protracted period of time.
In many senses, as noted by Stifel’s Chief Investment Officer, Michael O’Keeffe, in his Outlook 2025, this year marks a turning point. We are halfway through a decade that began with a pandemic, an economic shutdown, and a rocky reopening. We are also halfway to 2050, a milestone associated with technological transformation, innovation, and optimism. Using the analogy of a pendulum, 2025 is likely the year of some gravitational shifts. Trends such as government policies or market dynamics swing into favor, reach an extreme, and then are overcome by gravity, shifting back in the other direction. I believe as stated in his message that it is time to lean into the changes underway and have been positioning portfolios to capitalize on the transformational shifts occurring. Broadening portfolio exposure beyond the “Magnificent Seven” (M7) – Google parent Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla – focusing on quality, taking advantage of attractive bond yields, adding international exposure where appropriate, and considering innovative alternative investments will help navigate this market. I also remain humble and open to the possibility that we may need to suggest further portfolio adjustments if economic conditions deteriorate.
As always, thank you for your trust and confidence. If you have any questions, or if we can be of assistance, please do not hesitate to reach out.
Best personal regards.
Erik M. Melville, CFP®
Senior Vice President/Investments
Investing involves risks, including the possible loss of principal invested. Past performance is no guarantee of future results. Diversification and asset allocation do not ensure a profit or protect against loss. There are special considerations associated with international investing, including the risk of currency fluctuations and political and economic events.
Alternative investments involve a high degree of risk, often engage in leveraging and other speculative investment practices that may increase the risk of investment loss, can be highly illiquid, are not required to provide periodic pricing or valuation information to investors, may involve complex tax structures and delays in distributing tax information, are not subject to the same regulatory requirements as more traditional investments, and often charge high fees, which may erode performance. An investment is appropriate only for investors who have the capacity to absorb a loss of some or all of their investment. Volatility is measured by calculating the standard deviation of the annualized returns over a given period of time.