Our midyear market commentary explains why we recommend high-quality investments to help manage turbulent markets and an unclear outlook.

In December, we noted that “all the potential inflection points in the world make the range of potential investment outcomes unusually wide.” We did not expect the whole range of outcomes to occur in the first half of the year, but that’s effectively what happened. The S&P 500 gained 4.7% through late February amid optimism about economic growth, dropped almost 19% through early April as investors worried tariffs could cause a recession, then recovered more than 20% through mid-June as the Trump administration softened its tone on trade.

These fluctuations reflect investors’ profound uncertainty about the direction of federal policies, the economy, and corporate earnings. Investors have struggled to distinguish what the Trump administration says about tariffs from what it really means — a dynamic the media has labeled rhetoric versus reality.

We think the lack of clarity about the administration’s true intentions makes it impossible to have strong convictions in either positive or negative outcomes. Rather than latching onto particular narratives around the rhetoric on a given day, we recommend staying diversified, focusing on fundamentals, and emphasizing high-quality stocks and bonds that offer a degree of downside risk management.

“We recommend staying diversified, focusing on fundamentals, and emphasizing high-quality stocks and bonds that offer a degree of downside risk management.”

In this issue we cover:

  • A time for quality
  • Investment recommendations
  • Partnership contributor: Fidelity Institutional
  • Investment outlook
  • Partnership contributor: RCP Advisors
  • Q&A with David Laibson
  • Economic outlook
  • Appendix: investment framework
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