Monthly Financial News – February 2025

Mar 7, 2025

The U.S. stock market is about 6% below its all-time high. Recent discussions around tariffs and their potential economic impact have sparked concern with quite a few clients, so I wanted to take a moment to share some perspective. 

Since tariffs are self imposed, their impact will hinge on their duration. A swift removal would likely result in a minimal impact, but if they remain in place for months, the negative repercussions (particularly for the auto sector) are likely to be significant.

While the recent stock market movement might be worrisome, it’s worth keeping in mind that the average intra-year decline for U.S. stocks is about 14%. We did not see that level of decline in 2023 or 2024, but that will not last forever.

Notably, large U.S. tech companies have experienced a sharper decline than the broader market. Here’s a snapshot of some of the biggest companies (as of 3/4/25):

  • Tesla: Down 44%
  • Nvidia: Down 24%
  • Alphabet: Down 17%
  • Microsoft: Down 17%
  • Amazon: Down 16%
  • Apple: Down 9%
  • Meta: Down 13%

These fluctuations are a reminder of the inherent volatility of individual stocks, but they don’t necessarily signal a need to act. That said, your peace of mind is my top priority. If you’re feeling uncertain about your portfolio, or have questions about your broader financial plan, please don’t hesitate to reach out. I’d be happy to discuss your goals and how we’re tracking toward them. 

Below, I’ve also summarized a few interesting data points from the past month. Hope you enjoy.

Investing / Stock Market
  • 🐻 Many Anticipate a Stock Market Decline – Every week since 1987, the American Association of Individual Investors has surveyed investors on how they feel about the stock market. As of last week, bearish sentiment moved above 60% for just the sixth time in history. 
  • Interestingly, in those six prior instances, the S&P 500 was an average of 27% below its highs. But this time, the index is only ~6% off its all-time highs. Said another way, people are unusually bearish given where the stock market is.

  • Some good analysis from Morning Brew: “Perhaps somewhat counterintuitively, stocks typically perform well after poor sentiment readings,” wrote [David] Lefkowitz. “Not only do returns tend to be higher, but there is also a higher probability of a market gain—a year later stocks are higher 85% of the time.”

  • The trend has moved up recently, and now with tariffs in place, prices could increase more.
  • A worrying note from The Wall Street Journal: “A 25% tariff on the U.S. neighbors would increase the cost of a full-size SUV assembled in North America by $9,000 and a pickup truck by $8,000. The cost of an electric-vehicle cross-over would increase by $12,200.”

🌏 International Stocks Doing Well – Many international stock markets are outperforming the U.S., a reminder of the benefits of global diversification.

As a whole, from January 1st – February 28th, the US stock market is up 1.1%, whereas international stocks are up 5.6%. Some individual country market highlights below:

      • 📈 Tech Taking Over – Big US tech companies have performed great for years. As a result, their weighting in the S&P 500 has moved above 30%, a level not seen since the late 90s.
      • ⏳ IPO Timeframe – The average time it takes for a company to go public has moved up over time, and is currently ~14 years.

Real Estate

  • 🏠 Rent vs. Buy – If you’re comparing renting a home versus buying, this is a good calculator to help you run the numbers.
  • ❗️Add Your Trust to Your Insurance – Following up on last month’s article about home owners insurance, another tip: If you have a trust, add it as the “additional insured” for your home owner’s and car insurance policies.
  • 🏘️ Not Many Homes For Sale – The number of homes for sale has been trending down for a while. This limited supply is certainly a factor in keep prices at all-time highs:

Life

Quote of the Month

“The key to making money in stocks is to not get scared out of them.”

– Peter Lynch

I hope you found these interesting.

As always, please reach out if you have any questions or would like to connect.

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Past performance is no guarantee of future returns.

The graphs and charts in this commentary are for illustrative purposes only and not indicative of any actual investment. Index returns do not reflect any fees, expenses, or sales charges. It is not possible to invest directly in an index. Stocks are not guaranteed and have been more volatile than other asset classes. Historical returns were the result of certain market factors and events which may not be repeated in the future. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgement in determining whether investments are appropriate for clients.

This material is intended for information purposes only, and does not constitute investment advice, a recommendation or an offer or solicitation to purchase or sell any securities.

Disclaimer: Investments are not guaranteed and are subject to investment risk, including possible loss of the principal amount invested. Past performance is no guarantee of future results. All allocations and opinions expressed are as of the date of this presentation and subject to change. The information contained herein does not constitute investment advice or a solicitation. Information obtained from 3rd parties is believed to be accurate, but has not been independently verified.

The opinions expressed in this article are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security. The material is presented solely for information purposes and has been gathered from sources believed to be reliable, however Think Different Financial Planning cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. Think Different Financial Planning does not provide tax or legal advice, and nothing contained in these materials should be taken as such. As always please remember investing involves risk and possible loss of principal capital. Advisory services are only offered to clients or prospective clients where Think Different Financial Planning and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Think Different Financial Planning unless a client service agreement is in place.