March 2025 Investment Review & Outlook (Video)
Overview
In this special mid-quarter update, Ben Hockema explains why 2025’s market volatility isn’t necessarily bad news for investors. He reviews performance so far this year, the decline in the “Magnificent 7,” strength in international stocks and commodities, what a weaker U.S. dollar means, and how bonds and inflation-protected securities fit into portfolios.
Transcript (Edited for Readability)
Ben Hockema:
Hello and welcome to our surprise investment review and outlook video.
We try to do these quarterly, but when a year starts as eventfully as this one, it’s worth checking in early. I’m recording this on the afternoon of Thursday, March 13th, 2025, and I hope you’re seeing it soon after.
There’s been a lot happening in markets over the past few weeks—and plenty of client questions. So let’s take a closer look at what’s going on, what’s actually driving performance, and what it means for your portfolio.
Year-to-Date Market Performance
As of March 13th, here’s how major investment categories have performed in 2025:
Gold: up nearly 13% — the top performer so far this year.
Developed international stocks (Europe, Japan, Australia): up almost 8%.
Emerging markets: up 3% (led by China, South Korea, India, Brazil, and Eastern Europe).
Bonds: up about 2%.
U.S. stocks: the S&P 500 is down roughly 4.5%.
NASDAQ tech stocks: down 6.7%.
Consumer discretionary sector: down nearly 12%.
That last category includes companies like Amazon, Tesla, Home Depot, McDonald’s, Starbucks, Lowe’s, and Nike—and its weakness has weighed on both the NASDAQ and the S&P 500.
So, while U.S. large-caps have started the year on the back foot, global diversification has paid off. Most clients will likely see portfolios hovering around flat to slightly positive returns year-to-date, thanks to gains in bonds, international equities, and gold.
The Magnificent 7 Retreat
If we zoom in on the so-called Magnificent 7—Nvidia, Meta (Facebook), Apple, Amazon, Microsoft, Alphabet (Google), and Tesla—almost all are down this year.
Only Meta is up (about 5.8%).
The weakest performer, Tesla, is down 38%.
From their all-time highs, these stocks are still well below peak levels. For example, Tesla is nearly 50% off its high, and Nvidia—the world’s largest company before its recent slide—is down about 20%.
This reinforces why we trimmed exposure to the large-cap tech concentration late last year and increased allocations to international markets, real assets, and a long-short fund for added diversification. That shift has already proven beneficial.
Why International Stocks and Commodities Are Outperforming
A key driver of the recent performance gap is the U.S. dollar.
The dollar index peaked near 110 in early January, and has since fallen to around 103—a significant move. When the dollar weakens, international assets become more valuable when converted back to U.S. dollars.
International stocks benefit because they’re priced in local currencies.
Commodities, including gold, also rise when the dollar falls.
A weaker dollar is actually bullish for global markets and healthy for long-term economic growth. While a “strong dollar” helps consumers buy imported goods, a modestly weaker dollar supports U.S. corporate earnings, exports, and GDP growth.
Bond Market Update
Bonds have quietly provided stability this year.
The 10-year Treasury yield sits near 4.28%, while the 2-year is about 3.94%. For the first time in a while, the yield curve has normalized—meaning longer-term bonds now yield more than short-term ones.
That’s good news: an inverted curve (where short rates exceed long rates) often signals recession risk. The fact that it’s now upward-sloping points to better growth expectations.
Inflation and TIPS
The 10-year TIPS break-even rate—a proxy for expected inflation—is around 2.3%. That’s relatively low compared with long-term averages, suggesting that inflation-protected bonds (TIPS) are attractively priced right now.
We’re gradually extending bond maturities (building a longer ladder) to lock in these higher yields and adding some TIPS exposure where appropriate. I-Bonds also make sense again for some clients.
Putting It All Together
So far this year, diversification has worked exactly as intended.
U.S. large-cap growth stocks have stumbled.
International equities, commodities, and gold have strengthened portfolios.
Bonds have provided both yield and stability.
Long-short and real-asset funds have cushioned volatility.
We’re not trying to predict which single asset class will win next. Instead, we’re focused on maintaining balance—buying when opportunities appear and keeping you positioned for long-term success.
Outlook and Mindset
There’s no need to panic. Volatility has picked up compared with 2024, but that creates opportunity. If markets continue to sell off, we’ll be buyers—not sellers.
You don’t have money in stocks that you’ll need to spend in the next decade, so temporary declines are a normal part of compounding wealth over time.
While I still have concerns about long-term inflation, politics, and global uncertainty, from an investment perspective, the outlook remains positive. I’d be surprised if we don’t see new all-time highs in the S&P 500 before the end of 2025.
So stay invested, stay diversified, and remember—short-term volatility often paves the way for long-term opportunity.
Closing Thoughts
If you’d like to discuss how these trends affect your personal allocation or cash-flow strategy, reach out anytime. We’re here to help you stay confident and informed, no matter what headlines are doing.
