The $trategist - Are We There Yet?

Q1 2025

Are We There Yet?

Tom Wargin

That is what my young sons would ask as we were twenty miles outside the city on our annual trip “up north.” However, here I’m referring to the investment question—whether the bottom has been made in the stock market now that the major indexes have dropped from their peaks.  One might be tempted to “batten down the hatch” and go into a total protective mode by going predominantly to cash and bonds. While a portion of that is a good thing, I would caution against overreacting. Volatility has most definitely increased and, to that, I would suggest turning off your TV and news feeds and instead going for some long walks to enjoy the outdoors.  Some of you may remember owning Oaktree, which was the publicly traded stock of renowned investor Howard Marks. He still publishes his views, which are very good at looking at the markets logically. Following is a ChatGPT review of how Marks would describe the year-to-date markets including all the tariff action.

The State of the Market: 2025 YTD Through a Howard Marks Lens

• Markets advanced—until they didn’t
• Through Q1, equity markets pressed higher, led by mega-cap tech and AI optimism.
• Recent weeks brought a notable pullback, sparked by escalating trade tensions and newly announced tariffs—reminding investors that         macro risks remain alive and well.

Tariffs: A Blast from the Past

• The U.S. and China reintroduced reciprocal tariffs, targeting semiconductors, EVs, and select raw materials.
• Markets, which had grown complacent about geopolitical and trade risk, reacted swiftly.
• Investors must now weigh the impact on global supply chains, corporate margins, and inflation trajectories.

The Fed’s Tightrope Gets Trickier

• Sticky inflation already delayed anticipated rate cuts.
• Now, tariffs risk adding another inflationary impulse.
• A central bank trying to thread the needle must navigate both cyclical uncertainty and exogenous shocks.

The Consensus Still Favors a Soft Landing—But Cracks Are Forming

• Optimism hasn’t vanished, but conviction has weakened.
• Economic data remains mixed— resilient, yet susceptible.
• When the crowd leans too heavily in one direction, even small surprises can cause big shifts.

Where Are We in the Cycle?

• The market is recalibrating—not panicking.
• We’re likely in a late-stage expansion, where the upside is limited and the margin for error narrows.
• Now may be a time for selectivity, not wholesale retreat—but certainly not blind optimism.

As Howard Marks might say: we can’t predict, but we can prepare. The key isn’t knowing what will happen—but understanding what’s already priced in, and what risks are being ignored.

To that end, Liberty’s approach to diversified portfolios does well in a wide variety of economic situations. We continue to make choices focusing on the long-term outlooks, while accommodating for short-term needs, and maintaining our approach of value investing. It is our belief that this approach has and will help us be as prepared as possible for whatever the future may hold.

Planning Notes 

June Schroeder, R.N. CFP

Receiving a reund?

According to Bankrate, 75% of those receiving refunds say they are important for their finances. Refunds are used by 28% of tax filers to pay down debt and 26% plan to boost savings. I guess that means the rest plan on spending it!

Scams Increasing

Stop and think! The IRS estimated that $9.1 billion worth of tax fraud and financial crimes were committed in 2024. Seniors and millennials are the most likely to be scammed, costing over $36 billion annually. The cybersecurity insurance market is expected to grow to $33 billion/year by 2027, up from $6 billion only five years ago.

Chocflation

The price of cocoa hit a record high in December. In the last two years, the cost of manufacturing chocolate has increased by more than 167%, according to Federal Reserve data. You might have noticed that chocolatiers, like Mars and Hershey, have reduced the amount of cocoa in some of their candies and also introduced new, non-chocolate choices.

U.s Gold Reserves 

Just over half of the Treasury’s stored gold is kept in deep storage at Fort Knox, KY followed by the West Point Mint in New York, Denver Mint, and a small portion at the New York Federal Reserve Bank. The facilities are heavily guarded, and Ft. Knox has allowed visitors only three times.

Client Alerts

Shannon Nook, FPQP ™

Investment Policy Statement Review 

We continue to manage your account allocation in accordance with your most recent designated investment objectives, Investment Policy Statement (IPS). Note: It is your responsibility to advise us on changes in your financial situation, income needs, investment objectives, or to impose, add, or modify any reasonable restrictions on the management of your accounts. Contact us to discuss this further.

It's regulation Time Again

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Meet Michael Wesolowski

Michael joined the Liberty team in February of 2025 as our Development Educator & Associate Advisor. He has a background in accounts receivable, along with several years of financial advisory industry experience. His experience includes building financial plans, adapting to technical software to assist with investment research, trading, and writing content in plain English to make it easier for clients to grasp complicated concepts.

Prior to working in finance, he taught internationally for seven years in Thailand and was an online tutor to Chinese students. The experience ignited a love of languages. Advanced in Thai, he also speaks a bit of German and Mandarin to name a few.

Michael works with other team members in handling many of the back-office operations. He is eager to get to know Liberty’s clients better and work together with them to help them achieve their goals.

Michael lives with his wife and two children in Elkhorn, WI. He attended Loyola University of Chicago and majored in finance and economics. In his free time, Michael likes to coach his son’s soccer team, go fishing, work on his coin collection, exercise, and sing.

Michael’s passion for financial planning stems from his grandfather’s insistence on planning for the future and being disciplined. He is committed to delivering a great experience for Liberty’s clients.