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Hello, and thank you for listening to this quarter’s WealthFactor Investing Insights presentation.
I’m Bill Woodruff. At WealthFactor, our mission is to help investors navigate the complexities of the market by delivering clear, data-driven perspectives you can act on.
Today, I’ll walk through recent developments in the global economy and financial markets. We’ll explore how interest rates, economic policy decisions, and valuation dynamics are influencing performance—and what that means for long-term investors. My goal is to provide a perspective rooted in evidence, not emotion, to support sound, strategic decision-making.
Before we begin, a quick word on disclosures:
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 start with some context.
The recent market decline has been driven in part by policy headlines—tariffs, in particular—but that’s only part of the story. In this discussion, I’ll aim to give a broader view:
We’ll look at how different segments of the market have performed across time, and how recent price moves align with fundamentals like valuation and interest rates.
As you’ll see, despite the noise, one principle continues to prove its value: diversification works. That’s especially evident in how high-quality bonds have performed as yields have fallen and prices have risen.
Here, we break out market performance across key time periods—2022, the 2023–24 rebound, and Q1 of 2025.
2022 was tough across the board, but particularly harsh for large-cap growth stocks, which fell nearly 30%. In contrast, large-cap value stocks were down just 7.5%.
Fast forward to 2023 and 2024—large growth bounced back aggressively, up over 90%, while large value rose about 28%. Then came Q1 of this year, and the script flipped again: large growth declined by 10%, while large value gained over 2%.
What’s notable is the full-cycle view. Despite the swings, cumulative returns between large growth and large value from the start of 2022 through Q1 2025 are quite similar. But the ride to get there—especially for growth-focused investors—was far more volatile.
This slide is a helpful reminder: intra-year declines of 10% or more are common. In fact, they occur nearly every year.
Yet historically, markets often recover and finish the year in positive territory, even after sharp drawdowns. Long-term investors benefit from recognizing this pattern and staying disciplined through volatility.
There’s been a lot of noise around the recent market decline, with tariffs being cast as the primary culprit. But I believe that perspective oversimplifies what’s really happening.
From my view, the recent selloff isn’t particularly alarming—and the areas hit hardest are within historically normal correction ranges. What we’re seeing is less about the specific headlines and more about how the market is digesting valuation risk. In other words, it wasn’t necessarily the tariffs themselves—it could have been any number of catalysts. The market was priced for perfection in certain areas, and the tariffs just happened to be the match that lit the repricing.
This chart puts valuation into context. Even after the pullback, equity valuations remain elevated compared to long-term averages. When stocks trade well above historical valuation ranges, they become more sensitive to any negative shift in sentiment—whether that's policy-related, macroeconomic, or otherwise.
This is why concentration in a narrow group of high-valuation stocks carries risk. When expectations adjust, the reversion can be quick—and painful. It’s a good reminder that valuation always matters, and that maintaining a diversified, valuation-aware approach is key to managing through these kinds of environments.
This chart shows how various asset classes perform relative to each other over time, with each color-coded block representing a different asset class year by year. The white boxes represent a diversified portfolio—what we’d call a balanced asset allocation.
You’ll notice something interesting this year: after leading the way in 2023 and 2024, U.S. large-cap equities have fallen closer to the bottom in 2025. In contrast, non-U.S. equities—particularly developed markets—have outperformed, benefiting from more favorable valuations and a rebound in global sentiment.
This shift is an important reminder that leadership rotates. Markets don’t move in a straight line, and the best-performing asset class one year often doesn’t repeat the next. That unpredictability is why we build diversified portfolios.
We don’t aim to guess which corner of the market will lead in any given year. Instead, we focus on owning a globally diversified mix that seeks to smooth the ride, reduce concentration risk, and increase the probability of success over time.
Let’s wrap by tying it all together.
It’s tempting to look at past winners—companies like Apple or Nvidia—and assume their run will continue. But markets rarely repeat in such a linear fashion.
2025’s performance reminds us that chasing recent success often leads to disappointment. The most compelling opportunities may lie in the areas that feel overlooked or undervalued today.
That’s why we emphasize discipline: sticking to a plan, rebalancing when needed, and resisting the urge to react emotionally.
By focusing on what we can control—diversification, cost, and risk exposure—we put ourselves in a stronger position for long-term success.
Thanks for joining me this quarter. I look forward to continuing the conversation as we work toward your goals together.