The Heat is On…

A few days of extreme heat keeps you inside and gets you thinking. I keep running into folks who think that the stock market is way down for the year.

Despite all of the noise so far this year, the reality is that the U.S. economy is continuing to expand and unemployment remains low so folks are working and spending what they’re earning. This is good for consumers and ultimately for corporate earnings, which drive the stock market.

Through June 23, 2025

The Federal Reserve is on hold with regard to interest rates, but you can still get paid a decent rate on cash today. And if you want to lock in today’s rates for longer, it’s as good a time as we’ve had in the last 20 years to invest in taxable or tax-free municipal bonds.

So things are actually still good for most of us. Your grass was green (at least before this week) and either you or somebody you know has either traveled somewhere recently or is planning on a trip somewhere overseas soon.

What could go wrong?

Anything or nothing, which has always been the case and remains the same today.

Today, it could be China or the Straight of Hormuz or a cyberattack or AI or political theater in our country.

The bottom line is that there is always risk in the world and investing always involves risk, but these risks and any damage they’ve caused has always come and gone, leading to positive long-term returns that allow most investors to achieve their goals.

Despite the potential for extreme volatility in the short-term, like we’ve seen already in the first half of 2025, the best course of action has always been to simply remain invested through the ups and the downs and let the markets sort themselves out. In the long run, this gets you what you need. In fact, volatility is normal and should be expected rather than feared.

Do we know what’s coming next? No.

Is a recession, which tends to have the most significant downside impact on the stock market, coming soon? No, or at least it does not look like a recession is coming anytime soon.
But at some point, the headlines may have you believing that one is, even where there’s no actual truth in the headline itself. And this may become more difficult to discern when there’s bad news swirling on every channel you turn to.

So what to do? You’ve heard me say over the years, and most typically in the midst of market volatility that we should remain focused on what we can control.

I expect that many of us have other aspects of our financial lives (tax planning, estate planning insurance planning, family planning, etc.) that we can focus on instead of day-to-day or month-end value of our investment accounts. Keep this in mind and consider choosing something in these areas to accomplish between now and the end of the year because the odds are that this focus will provide a healthy distraction.

Or, at least if you’ve read this, hopefully you’ll keep the same cool head that you have now (with your A/C on indoors) and let whatever happens come and go.
Volatility is normal and something unforeseen is bound to happen at some point. Do we know what it will be? No. Can we control it? Absolutely not. Can we focus on other important financial issues instead and still get some things done? You bet.

Enjoy these longest days of the year and any plans you have with your family and friends. And, as always, reach out to your ACM Wealth Advisor with questions or if you need ideas on which part of your financial plan still needs some work.

1. S&P 500 is represented by the S&P 500 Index, DJIA is represented by the Dow Jones Industrial Average, NASDAQ is represented by the NASDAQ Composite Index.
2. Sources: MacroBond Financial AB, Morningstar Inc., Bloomberg LP. 10-Yr Treasury is represented by the MacroBond 10-Year Treasury Bond Index, US Bonds are represented by the Bloomberg Barclays US Aggregate Index, and Munis are represented by Bloomberg Barclays Municipal Bond Index.
3. Federal Reserve Economic Data (FRED); St. Louis Fed; 6.23.25
4. Munis yield is calculated using yield-to-worst.

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