Navigating a Volatile 2025 with Resilience and Discipline
Volatility Is Back
As we reach the midpoint of 2025, one thing is clear: volatility has returned. This year’s market environment has been more tightrope than runway. Political posturing over tariffs, debates around interest rate policy, questions about Federal Reserve independence, a frothy tech sector, and the growing weight of U.S. debt in a higher-rate world have all created a challenging backdrop for investors.
In this kind of environment, patience, discipline, and yes, maybe a good pair of noise-canceling headphones are your best financial tools.
What We’re Seeing Now: Market Movements and Misfires
Let’s begin with the numbers. The S&P 500 finished 2024 with back-to-back 20%+ returns for the first time since the 1990s, ending the year at 5,881. But the story in 2025 has been much choppier. The Federal Reserve cut rates by 100 basis points heading into the year. Inflation has cooled a bit but remains stubborn. Labor markets are steady, but not as strong as they were. The low-hanging fruit has been picked—what’s ahead will take more thought and strategy.
After a sharp drop in stocks from mid-February to mid-April—where the S&P 500 fell as much as 18%—markets have clawed their way back to end May roughly flat for the year. Meanwhile, 10-year Treasury yields, which had come down last fall, have surged again to 4.5% as inflation sticks around and the government’s spending spree continues—prompting the return of the bond market’s unofficial hall monitors.
Political Theater, Real Economic Impact
The honeymoon phase is over. The Trump 2.0 administration’s policies are making waves, and investors are trying to separate signal from noise. Tariffs, tax changes, defense budgets, and immigration headlines are grabbing attention—but only some of it really important for markets.
Tariffs are once again front and center. A planned hike is paused until July, but legal wrangling is underway. A lower court struck down most of the proposed tariffs, but a federal appeals court hit pause on that ruling. It’s possible the Supreme Court will weigh in. For now, this uncertainty is squeezing margins in sectors like manufacturing, retail, and tech.
Meanwhile, tax reform is back on the table. The current Senate bill would extend tax cuts from 2017, expand the child tax credit, and raise the QBI deduction—a big deal for many small businesses. It also proposes a higher SALT cap for households under $500,000, a tip income deduction, and a $4,000 deduction for seniors. The House has already passed it, but it’s hitting some headwinds in the Senate over budget concerns and healthcare provisions.
As always, we’re watching how this all affects portfolios—not just politics.
Staying the Course: Why Diversification and Fundamentals Still Matter
In times like these, consistency and moderation are more valuable than flashy bets. Our approach remains rooted in long-term fundamentals and thoughtful diversification—two pillars that don’t rely on perfect timing.
We’re favoring:
- Companies with strong balance sheets
- Increased international exposure, especially in developed and dividend-paying markets
- Bonds with moderate duration and sensible credit exposure
- Infrastructure and industrials benefiting from reshoring and automation
- Exposure to sectors aligned with trends like rising productivity, supply chain shifts, and global infrastructure upgrades
It’s a strategy we call “boring is beautiful.” It may not make headlines, but it may help clients stay on track when markets feel anything but predictable.
Macroeconomic Outlook: Fed Patience, Economic Resilience
Despite the headlines, the economy is proving surprisingly durable. While surveys and sentiment have been mixed, the hard numbers tell a steadier story: people are spending, businesses are investing, and wages are moving up faster than inflation—especially for lower earners.
First Quarter Recap: Q1 GDP came in at -0.2%, slightly better than originally reported. The decline was mostly due to a 42.6% spike in imports as companies rushed to beat possible tariffs—dragging GDP down by over five percentage points. Strip that out, and it’s a much healthier picture: business investment in equipment rose nearly 25%, particularly in tech.
Second Quarter Outlook: According to the Atlanta Fed’s GDPNow model, consumer spending and business activity remain strong. Final sales are tracking close to 4.6%, showing solid underlying demand.
Household Health: Real wages are growing, hours worked are up, and disposable income is at an all-time high. Boomers, who hold around $80 trillion in net worth, are fueling spending in healthcare, travel, and home upgrades. Services continue to lead the way in consumption.
Caution Flags: We’re seeing a slight uptick in delinquencies on credit cards, auto loans, and student debt. Nothing alarming yet, but it’s on our radar. On the plus side, gas prices are low, giving households a bit of relief.
Final Thoughts and Finances on Tap – June 18
RSVP Here https://paragon-wealth.com/events/
Want to dig deeper into these themes? Join us on June 18 for the next Finances on Tap—our mid-year market outlook. We’ll cover what’s happened so far in 2025, where things might go next, and what it all means for your portfolio. No slideshows, no jargon—just real insight and a chance to talk strategy over a drink.
The Long Watch isn’t about sitting still. It’s about staying engaged, being intentional, and navigating change with a steady hand. This year might not be thrilling, but it’s a critical time to stay focused and make smart decisions.
Thanks for staying on the watch with us.
If you’re wondering whether your portfolio is still aligned with today’s market—or if you just want a second set of eyes—reach out. We’re here to help you navigate 2025 with clarity and confidence.
Paragon Wealth is proudly based in Doylestown, PA, serving clients locally and across the country with personalized financial guidance.
About Ricardo
Ricardo J. Ferreira is the Portfolio Manager at Paragon Wealth, a firm he co-founded with Charlie McNamara, III, and Phil Rosenau. With a passion for finance and a talent for solving complex financial challenges, Ricardo leads the firm’s investment strategies, ensuring clients receive personalized and forward-thinking solutions.
A decorated U.S. Navy Veteran, Ricardo served at N.A.E.S. Lakehurst and aboard the USS George Washington, where he worked in aviation support. After his military service, he studied economics at Liberty University and began his financial career at Prudential Financial, where he met his future partners, Charlie and Phil.
Outside of work, Ricardo enjoys spending time with his family. He is married to Tina, owner of Main Street Accounting & Tax, and they have two children. Active in his community, Ricardo participates in various local events and serves on the finance council at St. Jude Parish in Chalfont. A passionate runner, he can often be found competing in local 5k and trail races on the weekends. To learn more about Ricardo, connect with him on LinkedIn.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All investing involves risk including loss of principal. No strategy assures success or protects against loss.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Great Valley Advisor Group, a registered investment advisor. Great Valley Group and Paragon Wealth Management are separate entities from LPL.