Recent market fluctuations have once again highlighted the unpredictable nature of stocks over the short term. We understand that volatility can be unsettling, but as always, our investment philosophy remains steadfast: focus on what you can control—the strategic mix of investments aligned with your goals and the expenses associated with your investment strategy.
During periods of volatility, diversification plays a critical role in preserving capital and capturing upside potential. Portfolios invested across global stocks, bonds, and alternative assets, helping manage risk while capturing growth opportunities.
Recent Market Performance
This disciplined approach has proven resilient. In fact, many asset classes remain in positive territory year to date, with performance meaningfully outpacing common indices like the S&P 500, which dipped into correction territory briefly last month. This underscores the importance of diversification and a long-term focus, especially in uncertain times.
Q1 2025 performance highlights include:
- Developed international stocks are up 6%, and emerging markets have gains of 3.4%.
- Alternative investments in infrastructure and commodities are up 6% and 9.1%, respectively.
- U.S. bonds have provided stability with positive returns of 2.8%.
What’s Driving Market Volatility
Recent volatility is being driven by a mix of geopolitical tensions, shifting trade dynamics, and broader concerns about the global economy. These events often dominate headlines, but it’s important to maintain perspective.
Our investment team remains focused on the structural resilience of the U.S. economy:
- Resilient Economic Growth: While growth is moderating, this reflects a natural cooling of the cycle rather than signs of deep economic distress. Consensus forecasts expect growth to continue after accounting for the impact of tariffs.
- Healthy Consumer Spending: U.S. consumer spending, which drives 70% of the economy, remains strong. Low unemployment further supports stable spending patterns, making a sharp downturn unlikely.
We continue to assess how these near-term events impact longer-term trends that truly matter—like global demographics, innovation, and economic potential.
Volatility in Context
Market swings, while uncomfortable, are a normal part of investing. As depicted in the chart below, the average intra-year decline for the S&P 500 is 14.1%, yet in 75% of those years, markets ended in positive territory. This pattern reminds us why staying invested through downturns is often rewarded.
Source: JP Morgan Asset Management, as of February 28, 2025
Additionally, behavioral biases can amplify the discomfort of volatility. Our brains are wired to react strongly to losses, a phenomenon known as loss aversion, which can lead to emotional decision-making. By staying focused on long-term objectives and avoiding reactionary investment decisions, we can mitigate the impact of these biases and maintain a sound financial strategy. This guidance is one of the areas of focus in research quantifying the value of working with a financial advisor What is Advisor Alpha? | Alaska Wealth Advisors.
Staying the Course
Market cycles are inevitable, but history shows that patience and a well-structured plan lead to positive long-term outcomes. Our focus remains on managing what matters most: asset allocation, risk exposure, and alignment with goals.
We will continue to monitor conditions closely and make thoughtful adjustments as needed. If you have any questions or would like to confirm your goals and corresponding strategy, we’re here to help.
Kirsten Halpin, CFA, CAIA, FRM
Director of Investments
The opinions expressed are those of Alaska Wealth Advisors, LLC. The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Forward-looking statements cannot be guaranteed.
Alaska Wealth Advisors, LLC is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Alaska Wealth Advisors’ investment advisory services can be found in its Form ADV Part 2 and/or Form CRS, both of which are available upon request.
