“Resilient” is the often-used word for the U.S. Stock market this year. A better word might be “unbelievable”. Despite the threats and imposition of trade tariffs, a military attack on Iran, a budget busting tax and spending bill which could send interest rates higher, and two ongoing overseas wars, the stock market has set record highs. What’s going on?
Investors, rightly or wrongly, believe that the tariffs will not have the effect on inflation, interest rates, and earnings growth of companies, that usually would occur. Interestingly, the uncertainties that exist have, so far, not caused interest rates to rise or oil prices to rise. In fact, both are lower now than they were when Trump took office. But the tariffs’ impact has not yet been felt, as the final tariff rates are still being negotiated as we go to press.
Nevertheless, stocks are at levels above fair value historically. The current price to earnings level of the market is about 22 roughly, compared to about 18 for the last ten years. Therefore, given what we know now, or don’t know, we expect market volatility to continue, with a 5-10% “correction” (sell-off) likely at any time from recent DJIA levels of 44,375 and S & P 500 6,260. Therefore, we suggest most portfolios hold at least 10% in cash (money-markets).
Stocks we liked 3 months ago have done well since – especially Alphabet (Google), Truist, First Solar, and Pfizer. Johnson and Johnson and Verizon are down slightly but we still like all of the aforementioned. Contact any of our friendly advisors for more information about the above or for a free portfolio check-up.
Prices and yields as of July 14, 2025. The above information is believed to be reliable but is not guaranteed to be accurate. Investors should check every investment for suitability for his or her needs. Stock investing is risky, and you could lose money. The author and/or his clients maintain positions in all the above-mentioned securities. First Georgetown Securities, Inc. will provide available information supporting the above recommendations on request.