Quarterly Investment Foundations Second Quarter 2025

Mastering The Subject

Capturing More Returns Despite Volatility in the First Quarter

The first quarter of 2025 reminded us of an important investing truth: uncertainty is uncomfortable; but it doesn’t have to derail your investment plan. Even with headlines shouting about tariffs, inflation, and international tension, many well-diversified investors saw positive returns—and those who stayed the course were rewarded.

Let’s take a look at what happened in the markets, what it means for your portfolio, and how we continue to help clients like you manage uncertainty with confidence.
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‍Market Recap: Diversification Worked in the First Quarter‍

Markets started the year with strong reminders about the power of diversification. The results – with international stocks up and U.S. stocks down - may surprise those who followed the headlines closely. Despite the noise, the last 12 months have been solid for diversified investors with all stock categories having similar returns of between 5-10%.

_{Data as of 3/31/2025. Past Performance is no guarantee of future results. U.S. Stocks, International Developed Stocks, Emerging Market stocks, Real Estate stocks represented by Russell 3000, MSCI World ex USA, MSCI Emerging Markets, and Dow Jones US Select REIT indices. U.S. bonds and Global bonds represented by the Bloomberg U.S and Global Aggregate indices. The 60/40 Portfolio refers to a portfolio that holds 60% stocks and 40% bonds and is a calculated representation of the categories and their performance notes above.}

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The Case for Global Diversification

In one of our previous newsletters, Diversifying Your Stockpile, we discussed how owning stocks beyond U.S. borders can reduce volatility risk and improve long-term returns. That idea has played out well so far this year. In 2024, U.S. stocks outperformed. In 2025, international and emerging market stocks are leading the way.

By holding a globally diversified stock portfolio, investors captured more of the upside while smoothing out the bumps along the way. We saw firsthand how this strategy helped moderate volatility in the first quarter - a great example of diversification working exactly as it should.
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Uncertainty Is Inevitable—And That’s Okay

In our first quarter newsletter, Investing in 2025 and Beyond, we anticipated that uncertainty would play a big role in 2025. So far, that has proven true.

President Trump’s tariff plan was broader and more aggressive than expected, affecting everything from electronics to autos. In Germany and other European countries, government and military spending is set to increase, injecting new energy into their economies. And we saw European central banks lowering interest rates, while the Federal Reserve in the U.S. has held interest rates steady.

Despite U.S. stocks significant outperformance in 2024, the winners changed for the first quarter of this year. That’s a key lesson: markets often move ahead of the news and sometimes in a different direction than recent results.
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Don’t Let Anxiety Take Over – Control What You Can

It’s natural to feel nervous when markets swing. However, reacting emotionally can do more harm than good. Selling to feel better today may lead to regret tomorrow if the market rebounds while you’re on the sidelines. The nervous feeling during market downswings will likely be replaced by questions about when to jump back in.

At Grand Wealth, we take pride in managing what we can control:

• Rebalancing: When parts of the portfolio outperform or underperform, we trim the highs and buy the lows to maintain your long-term strategy.

• Tax-loss harvesting: We look for opportunities to sell investments that are down, capturing tax benefits that can improve your portfolio’s after-tax return.

By doing these things consistently and thoughtfully, we help you recover faster after downturns, minimize taxes, and stay on track toward your financial goals.
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Looking Ahead with Confidence

So far in 2025, the headlines have been loud and the news unexpected. With a globally diversified portfolio, smart rebalancing, and a clear plan, we believe clients like you are well positioned to capture long-term returns and ride out the bumps along the way.

As always, if you have questions about your portfolio or would like to talk through your financial plan, our team is here to help.

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_{Disclosure:
The opinions expressed herein are those of Grand Wealth Management (“GWM”) and are subject to change without notice. This material is not financial advice or an offer to sell any product. This article is for informational purposes only and does not constitute investment, legal or tax advice and should not be used as a substitute for the advice of a professional legal or tax advisor. GWM reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. This is not a recommendation to buy or sell a particular security. Past performance does not indicate future results. GWM is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about GWM including our investment strategies, fees and objectives can be found in our Form ADV Part 2 and Form CRS, which are available upon request.}