Client Newsletter Q2 2025
Dear Friends,
I’ve been managing assets for nearly two decades, and while markets are always dynamic, it’s human behavior that reveals the most consistent patterns. When volatility spikes, panic often follows—but memory fades fast.
In our last letter, I joked about “Captain Chaos” crashing the party. Since then, the market has delivered more turbulence—but also more resilience. Q2 brought strong gains across major indices, driven by strength in large-cap tech, cooling inflation data, and renewed investor optimism around AI and productivity. Markets looked past early-quarter volatility as economic data came in better than feared, and the tone around tariffs began to soften. For investors who stayed the course, the rebound offered both relief and perspective.
Markets now seem quicker to recalibrate—reacting to bold headlines, then finding their footing again. The Fed has kept rates elevated due to uncertainty around trade, supply chains, and inflation. If those pressures ease, we could see rates come down later this year. That would offer relief to areas like housing and consumer finance and help stabilize the broader economy.
Consumers are already adjusting by cutting back on discretionary spending—pulling back on extras like travel and dining out. The good news for now is that U.S. job numbers remain strong, and corporate earnings have mostly been positive. However, many companies boosted results by pulling demand forward or cutting costs to protect margins. While cost-cutting doesn’t always lead to layoffs, it can be an early signal. If it becomes more widespread—especially in consumer sectors, it could eventually affect employment.
The recent rally, while encouraging, deserves a closer look. Markets have shown a growing tolerance for risk, even amid geopolitical tension and policy uncertainty. But this climb feels more cautious than confident, driven more by a hunger for good news than a clear long-term vision. We’re staying alert and steady.
As Warren Buffett said, “We don’t need to outsmart the market—we need to out-discipline it.” That remains our focus: clear thinking, thoughtful positioning, and long-term results over short-term reaction.
We’ve been sending out scheduling links for fall check-ins. If you haven’t received one yet, keep an eye out for an email from Rae at admin@moonstoneasset.com. In the meantime, enjoy the rest of your summer.
Warm Regards,
Investment Advisory services offered through Moonstone Asset Management, Inc. a registered investment adviser
Risk Disclosure: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results.
This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.