2025 Q1 Market Recap
There’s an old saying: “If you don’t like the weather, just wait a minute.” Though it’s often attributed to New England, the phrase resonates deeply with anyone familiar with unpredictable spring weather — or, for that matter, volatile markets.
That’s exactly how the first quarter of 2025 felt.
Volatility Was the Only Constant
From January through March, market fluctuations became a daily headline. All three major indices ended the quarter down, and yet, the story wasn’t just about losses. Volatility, by definition, refers to sharp, unpredictable changes — not just declines. Markets struggled to stay pointed in one direction for more than a day or two, creating a state of flux that’s often harder for investors to stomach than an outright bear market.
Still, just as today’s market doesn’t predict tomorrow’s, Q1’s turbulence doesn’t necessarily foreshadow Q2. Let’s look at the key forces behind Q1’s market movements — and why volatility, frustrating as it is, may actually present opportunities.
The Big Three: AI, Tariffs, and Inflation
The Big Three: AI, Tariffs, and Inflation
1. Artificial Intelligence (AI):
Advancements in AI have fueled tech-heavy rallies over the past two years, with investor dollars flooding into companies developing cutting-edge tools to boost productivity. But in January, a Chinese firm, DeepSeek, debuted an AI model rivaling well-known platforms like ChatGPT — reportedly developed with far less capital and computing power. This development stirred investor uncertainty, causing significant price swings in AI-focused companies, including chipmakers and software providers.
2. Tariffs:
Unpredictable trade policy also rattled markets. President Trump enacted a 20% blanket tariff on all Chinese imports and a 25% tariff on steel and aluminum from all countries. Products from Canada and Mexico weren’t spared either. While some tariffs were implemented, many others were delayed, dropped, or left in limbo — contributing to a climate of economic uncertainty.
Tariffs affect the cost structure of companies relying on imported materials, especially in sectors like technology. When investors are unsure which industries will be hit or how severely, they tend to pull back. This ripple of hesitation fuels broader market volatility.
3. Inflation:
Though it’s taken a back seat in headlines, inflation still plays a starring role in economic policy. After dropping to 2.4% in September 2024, the inflation rate climbed back to 3% in January 2025 before easing slightly to 2.8% in February. Persistent inflation makes it more likely the Federal Reserve will maintain elevated interest rates — a drag on stock prices and a signal to investors to brace for tighter monetary policy.
With all three forces — AI disruption, shifting trade policy, and sticky inflation — overlapping and amplifying one another, it’s no wonder the markets have been on edge.
Volatility Isn’t a Bug — It’s a Feature
Market volatility is uncomfortable, no doubt. But as long-time investors and seasoned financial professionals know, volatility also reveals opportunity.
Here’s an example of what I mean. You remember how I said the phrase “If you don’t like the weather, just wait a minute” probably originated in New England? While he didn’t use those exact words, the famous author Mark Twain once alluded to them in a famous speech he gave to the New England Society in 1876. Here are a few excerpts of what he said:
“Gentlemen: I reverently belief that the Maker who made us all makes everything in New England — but the weather. In the spring I have counted one hundred and thirty-six different kinds of weather inside of four and twenty hours. I could speak volumes about the inhuman perversity of the New England weather. There is only one thing certain about it: You are certain there is going to be plenty of weather.
But…there are at least one of two things about that weather which we residents would not like to part with. If we hadn’t our bewitching autumn foliage, we should still have to credit the weather with one feature which compensates for all its bullying vagaries: The ice storm. When a leafless tree is clothed with ice from the bottom to the top — ice that is as bright and clear as crystal; when every bough and twig is strung with ice beads, frozen dewdrops, and the whole tree sparkles cold and white like [a] diamond plume. Then the wind waves the branches, and the sun comes out and turns all those myriads of beads and drops to prisms that glow and burn and flash with all manner of colored fires. The tree becomes a spraying fountain, a very explosion of dazzling jewels, and it stands there, the supremist possibility in art or nature, of bewildering, intoxicating, intolerable magnificence!
Month after month I lay up my hate and grudge against the New England weather, but when the ice storm comes at last, I say: “There, I forgive you now. The books are square between us. You don’t owe me a cent. Your little faults and foibles count for nothing; you are the most enchanting weather in the world!”
Just like Twain’s begrudging admiration for a New England ice storm, investors who endure the discomfort of market swings often find beauty at the other end — whether it’s undervalued stocks, resilient businesses, or renewed clarity on long-term goals.
Looking Ahead
The current quarter may have tested our patience. But it also provided moments to reassess, rebalance, and lean into strategies that weather uncertainty well. History has shown that the best investment opportunities often arise not in calm waters, but in stormy seas.
If you have questions about recent market trends or your long-term financial plan, let’s talk. And remember: no one can predict the weather, or the markets — but we can prepare for both.
Because sometimes, all we have to do is… wait a minute.
Disclosures:
Advisory services are offered through Assurance Wealth Management, a Registered Investment Advisor in the State of Texas. Assurance Wealth Management is not affiliated with or endorsed by the Social Security Administration, Internal Revenue Service, or any other government agency.
Whenever you invest, you are at risk of loss of principal as the market fluctuates. Past performance is not indicative of future results. Purchases are subject to suitability. This requires a review of an investor’s objective, risk tolerance, and time horizons. Investing always involves risk and possible loss of capital.
All written content is for information purposes only. The information contained herein has been derived from sources believed to be reliable, but is not guaranteed as to accuracy or completeness and does not purport to be a complete analysis of the materials discussed. All information and ideas should be discussed in detail with your individual adviser prior to implementation.
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