Q1 2025 – Market Update
By Contessa Archuleta on April 28, 2025
Fear and Loathing in the Markets – Kyle Burns
The term “gonzo journalism” is first credited to Hunter S. Thompson for an article he wrote on motorcycle gangs back in 1970. The term relates to a “style of reporting that places the reporter at the centre of the story in a highly personal and participatory way[1].” For many investors, the first quarter of the year may have felt like their investing world was in a type of “gonzo markets”. Fluctuations in the investment markets are normal, but for many, the early pullback has felt both more personal and participatory with oneself at the center.
The year in the markets began strong with an optimism around the policies of a new administration, potential for lower interest rates, and strong corporate earnings projections. The enthusiastic start for the US market did not last long. When the reversal in the US stock market hit, I was reminded of Hunter S. Thompson’s book, “Fear and Loathing in Las Vegas”. The story doesn’t waste any time before the chaotic nature of the book takes hold. The reader is moved almost instantly from a calm to a terrible roar, a sky full of bats screeching all around, and a convertible with the top down going 100 mph on the highway.
The analogy is perhaps a bit dramatic. However, the rapid-fire approach of the Trump administration has felt a little like a sky full of bats coming down in the form of policy proposals, executive orders, and tariffs. The actions by the administration have led to unpredictable markets as both consumers and corporations try to make decisions based on information that could be different tomorrow or even later today. What is unlikely to change is the change. The policy direction of the US is moving toward protectionism and away from globalization which was the major driving force in world economies over the past 80 years.
The move to protectionism is, as investor Howard Marks puts it, “the biggest change in the investment environment he’s seen in his career[2].” If the changes and tariffs hold, Marks’ sentiment may become true. Right now, we hope that the turbulence is only temporary and that the global systems of trust normalize again. The gyrations in the market don’t feel good to investors and when it feels even highly personal it hits even harder at our emotions. Investment theory always reminds us as investors to clear our minds, think critically, and pay attention to what matters. A recent article from financial writer Jason Zweig reiterates this point with his investing advice, “To prevail over this chaos, you must think clearly at a time when many investors—and policymakers—are an emotional mess[3].”
The Markets – Kyle Burns
Since the election we have been dealing with a whipsaw market that has been characterized by dramatic price movements in one direction before quickly shifting in the other direction. Prior to the start of April, egg prices may have been the best way to describe the chaos in markets. According to the USDA, egg prices rose 270% from $2.30/dozen at the end of September to $8.50/dozen at the end of February. Egg prices then proceeded to drop 53% to $3.95/dozen by the end of the first quarter of 2025. While many of us are not greatly affected by the price movements in eggs, the movements are a good example of what has been experienced in the broader markets through the first quarter+ of the year.
Broad markets started the year off with a rally. On February 19th, the S&P 500 reached a new all-time high, developed and emerging markets were up, and returns were positive for most bond markets apart from the US treasury index which was down 1.5 percent. The euphoria in markets soon wore off as the Trump administration began introducing tariffs with our global trading partners. The tariff announcements created uncertainty for the US markets and by March 13, the S&P 500 entered correction territory by closing down 10.3 percent from the all-time high. At the end of the quarter, the S&P 500 closed down -4.59 percent, the Nasdaq 100 down -8.25 percent, and developed international up 8.09 percent.
The outperformance gap of international developed markets versus the US was the largest outperformance, 12.68%, since the second quarter of 2009 during the Great Financial Crisis. At the end of 2024, some investors were worried about the high valuations seen in the US stock markets. There has long been a premium put on US based companies due to American exceptionalism in the investment markets, a dominant global currency, and a track record of pro-business policies. The constant announcements out of Washington have challenged some of these assumptions and led investors to question the high valuation metrics on US based stocks.
Bond markets have been a challenge as well. The Federal Reserve, long expected to ease rates this year, is now challenged managing major changes to global trade that could create inflation while also being tasked with maintaining economic activity if the US were to approach a recession. The wait-and-see approach being taken by the Fed and questions over a retreat of globalization have led to increased volatility for the bond markets. The 10-year US Treasury reached a high of 4.79 percent in January and finished the quarter at 4.21 percent. The futures markets for rates are currently projecting a June 0.25% decrease in short-term rates, but we don’t feel highly confident in any rates projections without more certainty in policy and tariff plans moving forward.
Our team continues to focus on long-term client strategies based on their financial goals. The unpredictable markets give both investors and advisers anxiety, but it is always a good time to reevaluate your goals and needs for your accounts. Trying to keep a long-term point of view on your investments should help to remove some of the pain from recent fluctuations.
Staff Updates:
Kyle: My family started the year out in Phoenix where we got to enjoy some sunshine and time together after the busy holiday season. During our trip we visited the Musical Instrument Museum. The museum is incredible and worth a visit when in the Phoenix area. My son James plays the cello and I think he could have spent an entire day at the museum. Back at school, the boys are finishing their second semester of their freshman year at Santa Fe High School. My wife, Tabitha, continues to work through her Doctor of Nursing Practice degree and does not appear to be too stressed with the workload so far. I would have liked to have had a little more snow this winter for skiing, but with difficult stock market, maybe it was better to not feel the pressure of great snow while at my desk. I have a lot of travel coming up this spring and I am hoping for more cooperative markets when I am on the road.
Contessa: The first quarter of this year flew by in a blink of an eye. The kids are busy with their school activities, sports and preparing for the end of the school year. Ayden played two characters in her school play, A Lighter Shade of Noir, and was also recruited by her teacher to serve as stage manager. Samuel played on the Atalaya basketball team, and his positive attitude, sportsmanship, and hustle really stood out. He’s looking forward to basketball camp this summer. They both earned their brown belts in taekwondo which I believe is testament to their hard work and dedication to building a healthy body and mindset. In March, Ayden traveled to Costa Rica for her 8th grade trip where she experienced the culture, food and beautiful landscape. The rest of the family met her in San Jose to pick her up and spent a week together exploring the beautiful country. At the office, we are planning a number of webinars and in-person events over the next few months. Please keep a lookout for those invitations!
Keren: Spring is finally here in Santa Fe, with one or two late snowfalls always a possibility. Perhaps it is in part because my son was born in April, along with warming days and budding trees and flowers, that I feel somewhat hopeful in this volatile time. Gryffen just turned 17, which feels somehow more significant than 16 did. After almost two years of health issues, he is growing stronger by the day and thriving more than he has done in a long time. It is a relief for us both, and we celebrated his birthday over a stunning pop-up dinner by a local chef. When Gryff was nine, he requested squid and caviar for his birthday, and even gave up a birthday party to celebrate over dinner at Shoko. Since then we have traveled to New York or San Francisco for his birthday to eat our fill of dim sum, sushi, and whatever other great food we could find. This year’s celebration felt particularly sweet. Being a single mom is one of the most challenging and rewarding things I will do in my life. Supporting my son and advocating for him through his health crisis was a scary and lonely ordeal. Being on the other side of it, and witnessing his pursuit of his driver’s license, his GED, and his first part-time job brings me immeasurable joy. “This too shall pass” is an oft-used mantra in my life. We are stronger than we imagine, and doing the hard thing is always worth it in the end.
Anthony: Over spring break, my family and I were able to get away for a much needed vacation. On the bucket list for our daughter Amaya was the Atlantis Resort in Nassau, Bahamas. The property was bigger than any of us imagined, providing us with everything we needed and more, including white sandy beaches, turquoise water, multiple swimming pools, a water park, and marine life at every twist and turn. One day we got to venture off on a boat excursion and visit other nearby islands. We got to feed iguanas, pet and hold full size reef sharks (overcoming one of my biggest fears), and even swim with the famous pigs of Exuma Island. We finished off the trip getting to enjoy some Bahamian culture and cuisine, creating an amazing experience none of us will forget. It’s been fun to see as Amaya gets older and more mature opt for pigs over Mickey Mouse, as she continues with her fascination and love for the ocean, just like her mother. It will be interesting to see what adventure she leads us on next.
Bonita: This spring has kept me very busy! Around this time last year my boyfriend and I decided to open a food truck and serve acai bowls and smoothies in Santa Fe. Having a love for fresh fruits, we often find ourselves looking for a sweet treat that is light, healthy and refreshing when traveling. We were excited to work with a local company that custom-built our smoothie trailer. We ended up having twice the number of electric appliances than most other food trucks and have been doing tons of research on generators and solar power to determine what best fits our needs. We want to truly be a mobile food truck in Santa Fe with the ability to be where our customers love to be; hiking, camping, exploring. Throughout this journey, we have learned so much about becoming a business owner. I am extremely thankful for all of the knowledge I have gained and continue to gain as part of The Rikoon Group. Although, overwhelming at times, it has been very rewarding to start a side-hustle and use our free time to so something new and challenging. I have also really enjoyed the opportunity to share this endeavor with my family, especially my young cousins, to be an example of pursuing your passions – even if there are many!
Jeff: In March, I went to Boston for a medical procedure and also to visit the Perkins School for the Blind as a possible option to consider for our granddaughter. The Perkins School is the oldest blind school in the country, founded in 1829, and it still has the reputation as being the best blind school in the country. The school and all the people working there were amazing, and I learned so much from all of them. The main reason for my trip to the Boston area was to go to the Center for Morton’s Neuroma (CMN) because it is the one and only clinic in the entire country that offers radio frequency ablation on feet for this condition. There are many hospitals and clinics throughout the country that perform radio frequency ablations on backs and spines, but this is the only one to do this on feet. Morton’s Neuroma is basically where the nerve between the fourth and fifth toe is inflamed and so it is always “on” and sending out pain signals whenever you stand or move or put any weight on the foot. I have had this for about two years and it’s painful and not fun. The usual treatment is steroid shots, and then if that doesn’t work, alcohol sclerosing is next. Then if that doesn’t work, surgery is usually the next and last choice. However, this surgery has a very low success rate and also very commonly results in even more problems. I tried the steroid shots and the alcohol sclerosing but with no results. I chose not to do surgery and to do more research. A local doctor first informed me of CMN and that started me on this journey. So far, I am very pleased with the results from the procedure and now I am even hoping to play pickleball again in the fall.
Gayle: Remember the 1960s TV show Batman? And all those flashes across the screen, like KAPOWIE, HOLY COW BATMAN, TO THE BATCAVE, THWACK and BOFF!! It seems when watching today’s TV headlines, we’re getting socked over and over. Well here’s a secret…don’t watch them. If you have one, listen to a reliable newscast. The visual effects on the screen are designed to upset us, create anxiety, and disturb our rational thinking. This hectic environment too shall pass; go outside, walk, enjoy your favorite music, shop for special ingredients and cook a meal with friends. Let’s let go of what we can’t control, and take care of ourselves and each other. Until next time, Gayle
[1] https://www.britannica.com/topic/gonzo-journalism
[2] https://kintsugiinvesting.beehiiv.com/p/how-to-think-when-the-world-doesn-t-make-sense
[3] https://www.wsj.com/finance/investing/trump-tariffs-investing-stocks-a12ce6e5?mod=article_inline
