2025 Mid-Year Commentary
As we reach the halfway point of 2025, we want to extend our sincere gratitude for your continued trust. This year has reminded us, more than most, of just how dynamic and unpredictable the investing landscape can be. The past few months have brought some of the most significant market swings since the pandemic, marked by sudden policy shifts, intense headline reactions, and evolving investor sentiment. In moments like these, steadiness matters.
At the start of the year, we outlined three possible market scenarios. The first resembled the 1920s – high-valuation environment meeting a credit event or policy error, triggering a sharp correction and prolonged volatility. The second was a 1950s-style whipsaw, marked by large swings and ultimately flat-to-moderate returns. And the third mirrored the late 1990s, in which inflation would stay contained, earnings would exceed expectations, and markets would melt upward momentum. Now, at the halfway mark, the market appears to be tracking closest to the second: the 1950s-style scenario of volatility without a definitive trend, with single-digit returns likely by year-end. Market-based odds of a U.S. recession have fallen to their lowest levels of the year, now sitting below 20%. That decline in probability reflects a stabilizing macro backdrop and aligns closely with the view we’ve held since January.
That said, uncertainty continues to shape the investment landscape. Trade dynamics, earnings variability, inflation expectations, and shifting monetary signals all remain in play. But rather than trying to outguess every twist, we’ve remained grounded in data and patient with execution, recognizing that not every sharp move demands a reaction. In a few instances this quarter, sharp intraday sell-offs were followed by equally sharp rebounds – a quiet reminder that short-term dislocations can offer long-term entry points for those willing to stay disciplined.
A notable tailwind for the second half of the year is the recently passed Big Beautiful Bill (BBB), a sweeping fiscal stimulus package with far-reaching implications. Among its many provisions, the bill supports infrastructure investment, industrial reshoring, and small‑cap revitalization – areas that have lagged in recent years but now present renewed potential. The early market response has been encouraging, particularly among domestically focused companies, and we’re keeping a close eye on how capital allocation trends evolve in response.
The investing environment also continues to be shaped by powerful structural forces, none more prominent than artificial intelligence. The U.S. Department of Defense has awarded multiple contracts – each up to $200 million – to top AI firms such as OpenAI, Google, Anthropic and xAI to develop advanced workflows supporting both administrative and national‑security applications. At the same time, defense contractors are seeing tangible benefits: Palantir, for example, has raised its full‑year revenue guidance to approximately $3.9 billion, driven in part by strong growth in defense‑sector AI software. This reflects how investment in next‑generation defense technology is both a strategic imperative and a growth catalyst for the sector.
Alongside these trends, Bitcoin has steadily expanded its place in institutional portfolios. JPMorgan has not only opened access to Bitcoin for clients but has now begun accepting Bitcoin ETFs – starting with BlackRock’s IBIT – as loan collateral, a clear signal of growing financial legitimacy. Gold, too, has reasserted its relevance. Over the past year, gold prices have surged more than 40%, and nearly 10% in the past month alone, now outperforming nearly every other major asset class.
Looking ahead, we are mindful that even in a bullish setup, the road may remain bumpy. Investor sentiment remains cautious, even skeptical – what some have called the “most hated rally on record.” That sentiment may, paradoxically, offer additional upside as pessimism gives way to participation. We continue to see opportunities in selective sectors such as defense, AI, energy, small caps, and industrials, while remaining cautious in areas where fundamentals remain challenged.
Through all of this, our investment philosophy remains rooted in risk management, strategic flexibility, and thoughtful rebalancing. We are prepared to pivot if the data no longer supports the thesis, but until then, we stay the course. Our goal remains simple: to preserve and grow capital with care, to act deliberately, and to help you remain confident even in an unpredictable world.
Thank you for the opportunity to guide your capital through this evolving landscape. We’re here, always offering clarity, perspective, and partnership.
Sincerely,
The Vigilare Wealth Management Team
IMPORTANT DISCLOSURES Vigilare Wealth Management is an SEC registered investment adviser. The information presented here is not specific to any individual’s personal circumstances. This is not an offer to buy or sell securities. No investment process is free of risk and there is no guarantee that the investment process described herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.