Halftime Report - 2025 #151

Get a clear, mid-year perspective on the markets in this episode of The Wiser Financial Advisor. Josh Nelson, CFP®, and Jeremy Busch, CFP® break down key economic trends, share timely market insights, and offer practical strategies to help you stay informed and make confident financial decisions for the rest of 2025. 

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Contact Josh Nelson: https://www.keystonefinancial.com
Contact Jeremy Busch: https//www.keystonefinancial.com
Podcast Editing: Tim Leaman/info.primegen@gmail.com

Transcript

Josh:
Hi, everyone. Welcome to The Wiser Financial Advisor Show with Josh Nelson, where we get real, we get honest, and we get clear about the financial world and your money. I'm Josh Nelson, a CERTIFIED FINANCIAL PLANNER™ and founder and CEO of Keystone Financial Services. Let the financial fun begin!

Jeremy:
Hi, everyone! I'm Jeremy Busch, also a CFP® here at Keystone Financial Services. Today’s episode is our 2025 Halftime Report.

Josh:
At the beginning of the year, we shared our annual market forecast. Now that we’re halfway through 2025, this is our chance to check in on what’s happened so far, where we are now, and what we see ahead for the rest of the year.

Jeremy:
As always, if you're a client and you have questions about any of this, please reach out. We try to stay ahead of what's happening globally and help you understand how it might affect your personal financial situation.

Josh:
That’s right. One of the big themes from our January forecast was volatility—and we’ve definitely seen that play out.

Jeremy:
We sure have. So today, we’ll walk through a few key areas:

• A review of the first half of the year
• Current economic conditions
• And our outlook for the remainder of 2025

Josh:
Also, a quick reminder: we’re both CERTIFIED FINANCIAL PLANNERS™, which is considered the gold standard in the financial planning world. That designation means we take a comprehensive approach—not just investments, but things like tax strategy, estate planning, risk management, and more.

Jeremy:
That’s why we created our comprehensive planning checklist a few years ago. Clients often ask how to describe what we do to their friends, so we put together a simple—but wide-reaching—overview of our services.

Josh:
And for those listening to the podcast version, you can watch the full video with slides on our YouTube channel. Just go to keystonefinancial.com and click the YouTube icon.

Jeremy:
Let’s dive in. One of our core values is making the complex simple. And let’s face it—the financial world can be complicated, especially when laws and tax rules are constantly changing. Even among professionals, there's often uncertainty about how new rules apply.

Josh:
Exactly. Even small tax changes can have a big impact on your financial picture. And while we always want to follow the rules, not knowing them could cost you money unnecessarily.

Where We've Been (January 1 – June 30)

Jeremy:
Let’s start with the economic backdrop. Core PCE inflation has come down—around 2.68% in June. That’s a solid improvement from where we started the year.

Josh:
While the Fed hasn’t made any rate cuts yet in 2025, they’ve continued to hold the effective rate around 4.33%. That mostly affects short-term rates like money markets, credit cards, and savings accounts.

Jeremy:
GDP growth has slowed, which was expected. Several global factors—like tariffs and geopolitical tensions—have contributed to that.

Josh:
And let’s not forget: many experts predicted a recession back in 2022, but it didn’t materialize. That’s a good reminder not to make big investment decisions based solely on expert forecasts, no matter how credible they seem.

Market Highlights

Jeremy:
So far this year, the S&P 500 is up about 6.8%. But we’ve seen a big divergence within the so-called “Magnificent Seven” tech stocks.

Josh:
Right. Meta, Nvidia, and Microsoft have been strong performers—up around 20%—while others like Apple and Tesla are negative year-to-date.

Jeremy:
This highlights the importance of diversification. Chasing just one segment of the market can backfire if that group starts to underperform.

Josh:
Treasury yields have ticked up as well—the 10-year yield is around 4.38%, up slightly from the start of the year. We also saw the inverted yield curve normalize, which quieted some recession concerns.

Investor Behavior & Volatility

Jeremy:
Let’s talk about volatility. The VIX—often called the “fear index”—spiked earlier this year, going above 50 before settling back down.

Josh:
That spike came during a rough April, tied to uncertainty around tariffs. The VIX is one of the things we watch closely—it tends to reflect investor anxiety in real time.

Jeremy:
And this is where planning is so critical. If you needed to pull a lot of money from your investments during a downturn like that, it could be painful. That’s why we always recommend having 3–12 months of expenses in cash or cash-like instruments.

Josh:
Exactly. Staying invested through volatility is key. Most people who try to time the market miss out on gains. Long-term success comes from being patient, disciplined, and diversified.

Where We Are Now

Jeremy:
As of June 30:

• Core inflation is still drifting toward the Fed’s 2% target
• Unemployment is around 4.1%, which is historically low
• Consumer spending remains strong, though earnings have been mixed across companies

Josh:
And valuation-wise, the S&P 500's price-to-earnings ratio is slightly above the five-year average. Not overheated, but something we keep an eye on.

Jeremy:
Retail activity, travel, and entertainment are still going strong. People are spending—even if it’s sometimes on credit.

Looking Ahead: Second Half of 2025

Josh:
Growth is projected at around 1.5–2%. That’s not booming, but it’s still positive.

Jeremy:
Inflation is expected to remain in the 2.5–3% range. Rate cuts? Earlier this year, we expected one or two. Now it looks like we might see none.

Josh:
There are always risk factors: global tensions, commodity prices, cybersecurity threats, political uncertainty. None of that is new—but it’s all part of the backdrop.

Key Themes to Watch

Jeremy:
We’re watching several major themes in the investment world:

• Artificial Intelligence
• Healthcare innovation
• Renewable energy

Josh:
These aren’t trends for trends’ sake. They represent areas of long-term structural change and global demand. And if you’re a client, rest assured—you already have exposure to these themes.

Final Thoughts

Jeremy:
So what should investors be doing right now?

• Stay diversified
• Focus on quality investments
• Avoid making decisions based on fear or headlines

Josh:
As Peter Lynch said, “The biggest gains in the stock market are never made in the best economy.” And Howard Marks reminds us that “discipline beats brilliance.”

Jeremy:
Having a team like ours allows you to stay the course, make informed adjustments, and keep your long-term goals in view.

Josh:
Thanks to all our clients and listeners. Our growth continues to come from referrals, and we’re truly grateful for your trust and support.

Jeremy:
If you have questions or want to talk through your plan, you can always reach us at josh@keystonefinancial.com or jeremy@keystonefinancial.com.

Josh:
Thanks for joining us for the 2025 Halftime Report. Don’t forget to subscribe, rate the show five stars, and share it with a friend. Until next time—stay wise and stay well.

We love feedback and we'd love it if you would pass it on to me directly at josh@keystone financial.com. Also, please stay plugged in with us, get updates on episodes, and help us promote the podcast by rating us five stars, and also subscribing to us at Apple Podcasts, Spotify, or your favorite podcast service. The opinions voiced in the Wiser Financial Advisor Show with host Josh Nelson are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine what may be appropriate for you, consult with your attorney, accountant, financial, or tax advisor prior to investing. Investment advisory services offered through Keystone Financial Services, an SEC registered investment advisor.