Uncertainty Rules 03.12.2025
Chief Investment Officer
Given the uncertainty around tariffs and what impact they may have on inflation, the stock market has experienced a sell-off as investors worry about a recession. In addition to tariff concerns, U.S. stocks were trading at above average valuations going into the new administration, making them vulnerable to any type of negativity. Fortunately, outside of tariff worries, underlying economic data going into the year was strong: employment data, earnings growth and declining inflation were all at good levels.
From a portfolio standpoint, we are benefiting from our philosophy of buying reasonably valued companies with consistent earnings, dividends, dividend growth and strong cash flows. These factors are currently being rewarded by a fearful market and our methodical approach to portfolio construction is a positive during corrective periods.
WealthSouth constructs balanced portfolios with strong diversification to include cash, bonds and stocks. Below are some takeaways from our positioning:
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Both cash and bonds have held up well giving our portfolios good support in the stock market selloff.
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Real assets with strong cash flows have also buffered price declines.
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Foreign equities have had positive attribution for the first time in months versus domestic companies.
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We have consistently trimmed large cap growth/tech during the past year on valuations, adding to undervalued areas of the market, including fixed income.
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Given the rise in interest rates since 2022, we have endeavored to lock in yields for the long-term, providing a stable and high level of cash flows for portfolios.
Thank you for your continued support and confidence. As always, please don’t hesitate to reach out to your WealthSouth team with questions or concerns.