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Hello, and thank you for joining this quarter’s WealthFactor Investing Insights presentation.
I’m Bill Woodruff. At WealthFactor, our mission is to help investors navigate today’s complex financial landscape through clarity, discipline, and a commitment to data-driven insights.
In this edition, we’ll review the key developments and underlying dynamics influencing markets through the first half of 2025. Rather than reacting to headlines or recent performance, we focus on context—what the data shows, how market structures are evolving, and what that may mean for long-term investors.
As always, my goal is to provide an evidence-based perspective—free from speculation and centered on fundamentals—to support sound, enduring investment decisions.
Before we begin, a quick word for compliance purposes:
What I’m sharing here reflects my views and is intended for informational purposes. These views are subject to change and involve risks and uncertainties—some of which are significant in scope and entirely outside our control.
There’s no guarantee these views will prove accurate, and actual outcomes may differ materially. Past performance doesn’t predict future results, and nothing in this presentation should be considered personalized investment advice.
Let’s begin with a bit of context.
In recent months, global financial markets have reflected a familiar mix of optimism and uncertainty.
In this discussion, we’ll take a closer look at the factors influencing asset class performance. That includes the concentration at the top of the U.S. equity market, how valuation considerations relate to expectations, and the current state of market interest rates—all examined without relying on forecasts or short-term narratives.
As always, our goal is not to react to market movements, but to understand them in a way that supports disciplined, long-term decision-making.
Let’s take a brief, objective look at market performance through June 30, 2025.
So far this year, the S&P 500 has returned just over six percent. That’s a solid outcome—especially following two strong years in 2023 and 2024—and particularly notable given the significant drawdown markets experienced through April.
Non-U.S. equities have also performed well in 2025. A meaningful portion of that return has come from currency effects, which can have a considerable impact in globally diversified portfolios.
As always, it’s important to remember that short-term returns are unpredictable. Rather than responding to headlines or recent performance, we remain focused on building portfolios grounded in evidence—designed to stay aligned with long-term goals through all types of market conditions.
One of the most notable aspects in US markets is the continued concentration within the S&P 500.
As of the end of June, just 10 companies—led by NVIDIA, Microsoft, Apple, and Amazon—make up nearly 40% of the entire index. While this level of concentration isn’t new, it does mean the index’s performance is being driven by fewer names than usual.
That’s not inherently good or bad—but it is meaningful. For diversified investors, it raises an important consideration: relying on a small group of companies for returns introduces a different type of risk. And that may not align with every household’s comfort level or long-term investment plan.
This is one reason why we emphasize broad diversification—across sectors, geographies, and asset classes—as a core part of our approach. It helps manage concentration risk and supports long-term resilience, even when market leadership is narrowly focused.
A major theme this year continues to be the dominance of the so-called “Magnificent 7”—Apple, Amazon, Alphabet, Meta, Microsoft, NVIDIA, and Tesla.
These companies have been responsible for a large share of the market’s overall return. Their business models are widely recognized, and their growth over the past decade has been significant. Not surprisingly, investor expectations for their future earnings remain high.
This is reflected in their valuations. Compared to the broader market, these stocks are trading at elevated multiples. That suggests a good amount of optimism may already be priced in.
That doesn’t mean these companies won’t continue to grow—but it does highlight the limits of relying on past performance to guide future expectations. When valuations stretch, it becomes harder for future earnings to exceed what the market has already anticipated.
As always, we avoid making forecasts about specific companies or sectors. Instead, we stay grounded in the broader principle that diversification—not concentration—is what helps position portfolios to navigate both upside and downside surprises over time.
Let’s shift to the bond market and interest rate environment.
After two difficult years in 2022 and 2023, bond markets have shown some signs of stability in 2025. Year to date, the Bloomberg Aggregate Bond Index is up 4%, while 5-year Treasury securities have returned just under 5%.
One structural feature that remains in place is an inverted yield curve—where shorter-term interest rates are higher than longer-term ones. As of June, this inversion continues, though it has moderated somewhat compared to last year.
Yield curve inversions are often discussed in the media as signals of future economic conditions. But in reality, they reflect current market pricing—shaped by inflation expectations, monetary policy, and investor demand across maturities.
Rather than draw conclusions from this, we view the bond market as a tool for managing overall portfolio risk and improving resilience. Bonds continue to serve an important role in providing balance, liquidity, and a source of potential income in a diversified strategy
Conclusion:
Let’s close by stepping back and focusing on what matters most.
Market narratives in 2025 have continued to revolve around a small group of dominant companies and shifting expectations for interest rates. But short-term outcomes—positive or negative—are never reliable indicators of future performance.
Rather than drawing conclusions from recent returns, we believe in staying grounded in data, process, and perspective. That means recognizing where concentration risks exist, understanding valuations in context, and being mindful of how changing rate environments may affect portfolios.
Ultimately, long-term success comes not from reacting to the moment, but from maintaining a thoughtful, evidence-based approach—anchored in discipline, cost-awareness, and a clear understanding of risk. Thanks for listening and please don't hesitate to reach out with questions.