Up, up, and away. The fourth quarter of 2025 extended a remarkable mid-decade run for global equities. While history has taught long-term investors to be pleased with average annual stock market returns of roughly 8–10%, the MSCI ACWI has delivered total returns in excess of 20% per year over the past three years—more than double what most would reasonably expect. This bull market has been fueled by a combination of factors: a resilient global economy, moderating inflation which allowed interest rates to move lower; a policy environment marked by tax relief and lighter regulation; a powerful surge in investment tied to artificial intelligence; and easing concerns around global trade and tariffs as the year progressed.

The striking disconnect between Main Street and Wall Street continues, mimicking the extreme polarization in our politics and society. As tariffs started to bite in Q2 and Q3 this year and the U.S. economy started to show signs of PTSD (President Trump Stress Disorder), equity markets around the world put in new highs. The S&P 500 has reached 28 new all-time highs so far in 2025, while conversely the U.S. labor market is weakening, inflation remains stubbornly elevated, economic uncertainty is flashing worry signals, and the leading economic index has contracted steadily dating back to mid-2022. Add to all this: rising U.S. national debt and government shutdown, the Federal Reserve’s sacred independence is under attack, and the global world order of mutually beneficial trade agreements and cooperation has been shattered by the current U.S. administration, creating global economic havoc. Yet, equities are hitting new highs. What in the world is going on?

The second quarter of 2025 unfolded in a world of heightened volatility and unpredictability. Geopolitical tensions, abrupt policy shifts, and weakness in leading economic indicators tested the resilience of investors and the market. From escalating trade disputes to growing unease over democratic norms, the global environment became more difficult to navigate with ripple effects felt across economies and our daily lives.

The second quarter opened with President Trump’s announcement of “Liberation Day”. These reciprocal tariffs targeted key U.S. trade partners and immediately unsettled global markets. The fear of a broader trade war quickly spread, consumers were fearful of rising prices, and consumer confidence quickly tanked. As the quarter went on, we faced harsh deportation policies, DOGE actions, political violence, and geopolitical risks in the Middle East, capping a period defined by volatility and a threat to American values.  In this environment of uncertain times, the resilience of investors and markets was tested like never before.

We may be entering one of the most volatile times our economy has seen in the last twenty years. And that’s saying a lot, considering we’ve already endured two not-so-insignificant crises in the Great Financial Crisis of 08/09 and the COVID-19 pandemic. We already know that the challenges will not be limited to the economy or the stock market this time. Tariffs loom large in this cycle, certainly in the mind share of the current administration in Washington, and there are the added uncertainties of haphazard and potentially illegal staff cuts, deportations without due process, the dismantling of federal agencies, emerging autocratic tendencies in the White House—spurred on by a pliant Congress—and the upending of longstanding, loyal, global alliances. Alarmingly, with the majority of Americans receiving their news from social media, often in 15-second soundbites curated for their political leanings, the response from large swaths of voters has been tepid, if not mildly supportive. The headline “eliminating waste, fraud and abuse” does not appear controversial. Yet, too few people are asking how randomly eliminating every fifth employee achieves this goal. Details are boring; headlines rule.