Written by Erik Laymon, Portfolio Analyst
May 31, 2025

Welcome to “In Laymon’s Terms,” where we cut through Wall Street’s noise to deliver clear, practical insights. This May, we’re unpacking the market’s ups and downs, strategies to help manage your portfolio, and why headlines don’t tell the whole story. Let’s get started.

Market Commentary: U.S. Markets Stay Strong

U.S. markets are holding their ground. Despite a Moody’s downgrade raising eyebrows about U.S. debt and tariffs fueling inflation worries, the S&P 500—tracking 500 top U.S. companies—has surged about 22% since April. Tech giants like Nvidia and Microsoft, riding the AI and cloud computing wave, are leading the charge. April 2025 was rocky, with the VIX Index (a gauge of market jitters) hitting 37.64—its third-highest peak since 1990. That volatility signaled uncertainty, but the recovery since then underscores U.S. stocks’ resilience, backed by solid earnings and fundamentals.

Still, the economy shrank slightly earlier this year, and consumer confidence has dipped. JPMorgan’s recession odds swung from a cheerful 15% in January to a grim 60% by Q1’s end, before settling at 35%. Compared to choppy global markets, though, U.S. stocks and bonds have remained solid. Looking forward, external factors—like tax code changes boosting growth or Europe’s unpredictability—could sway performance. The takeaway? Diversify with purpose.

Analyst Insights: Why Diversification Matters

With volatility and uncertainty in the air, diversification remains a cornerstone of smart investing—it spreads risk. Although they’re finally offering solid yield and diversification benefits, U.S. bonds are under strain from inflation fears and fading foreign interest, so branching out makes sense. Meanwhile foreign equities have enjoyed a growth run but many analysts are wondering how long it will last. Here are two options we are evaluating:

  • Alternative Assets: Think real estate funds, private credit, or multialternative strategies. These aim to zig when stocks zag, tapping unique growth sources.
  • International Markets: Stocks from Japan and India shine—Japan’s thanks to corporate shake-ups, India’s from its tech surge. Data shows international equities often outpace U.S. stocks 96% of the time during domestic slumps, though these windows can be brief1. In our assessment, Japan and to a larger extent, India offer the potential for longer-term progress.

A mixed portfolio can allow for a smoother ride. While the U.S. is a rock, sprinkling in other asset types can help manage the dips—like the one we saw earlier this year. It’s about balance, not chasing fads.

How to Navigate Market Volatility

New to investing? Here’s a key truth: volatility is normal, not a crisis. April’s wobble proved it—sharp drops often give way to rebounds within a year1. Staying the course beats trying to time the market. Our strategies lean on bedrock metrics like jobs data and company profits, not fleeting headlines. Selling amid a tariff panic might feel right, but history shows patience pays off.  Focus on facts, not noise.

In Summary

MMarkets shift, but a steady plan endures. Our approach for a thriving portfolio:

  • Hold Firm: Since 1990, the S&P 500 has an average gain of 24.9% one year after the CME volatility index hits above 301.
  • Mix It Up: Diversification can help manage volatility.
  • Stick to Basics: Jobs and earnings trump headlines.

Sharp declines can potentially lead to strong recoveries.

  1. Statistics from Black Rock’s May 2025 Student of the Market: https://www.blackrock.com/us/financial-professionals/insights/student-of-the-market (Pages 4 & 6)

*This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

**Diversification does not assure a profit or protect against loss in declining markets, and diversification cannot guarantee that any objective or goal will be achieved.

***All indices are unmanaged, and investors cannot actually invest directly into an index. Unlike investments, indices do not incur management fees, charges, or expenses. Past performance does not guarantee future results.

****Investing in alternative investments may not be suitable for all investors and involves special risks, such as risk associated with leveraging the investment, utilizing complex financial derivatives, adverse market forces, regulatory and tax code changes, and illiquidity. There is no assurance that the investment objective will be attained.

*****The main risks of international investing are currency fluctuations, differences in accounting methods; foreign taxation; economic, political, or financial instability; lack of timely or reliable information; and unfavorable political or legal developments.