In our last note, we mentioned that 2025's journey might include some air pockets along the way – and we've certainly hit one recently. The good news is that we were prepared for this turbulence.
The markets have faced increasing headwinds this quarter, largely stemming from policy developments. As we cautioned previously, while markets initially defaulted to optimism around certain policy changes, the potential downside from tariffs and other shifts has so far outweighed the upside – a nuance that was underappreciated earlier in the year. This reinforces our view that we're in a different market environment with different priorities that demands a different playbook. Despite these challenges, the foundation remains relatively solid with healthy consumer balance sheets and good corporate margins, though we're watching our leading indicators closely as the situation evolves.
Anticipating these challenges, we proactively adjusted our positioning at the beginning of the year by reducing our equity allocation, increasing our bond holdings, and further diversifying portfolios geographically. While market pullbacks always present opportunities, we're maintaining our discipline and patience as we evaluate the landscape - maintaining our focus on long-term thinking in an increasingly short-term world.
As a reminder, we operate with what we call our Risk Slider Approach – a framework where staying invested remains crucial, as we're never completely out of the market or all-in on any single approach. However, we do adjust positioning based on market conditions and risk assessments. Since late February, our strategies have been positioned at their most defensive stance within our framework. These moves aren't reactive, but rather forward-looking positioning to capitalize on opportunities while building in additional buffers against potential volatility.
In our latest Doxa Takes episode (below), we were delighted to continue our annual tradition with Callie Cox, Chief Market Strategist at Ritholtz Wealth Management and author of the OptimistiCallie newsletter. Together, we break down the essentials of risk management in today's volatile landscape, examine the "all-weather" portfolio approach, and discuss long-term thinking in today's short-term world – themes that align closely with our investment approach at Doxa. As a trusted voice in financial media with contributions to Business Insider, CNBC, Bloomberg, the Financial Times, Yahoo Finance, and Barron's, Callie delivers the practical wisdom investors need in today's complex landscape.
Click the link below or search "Doxa Takes" on Apple Podcasts, Spotify, or Overcast. Enjoy!
