Q1 2025 Client Letter & Market Commentary
Dear Clients,
At A.G. Campbell Advisory, we understand and empathize with the anxiety many of our clients are feeling in today’s market. Behavioral finance shows that discomfort often drives impulsive, emotionally driven decisions — and those rarely end well.
We have some suggestions and things to remember:
- Tariffs are not new to this country or the world. In 1890, President McKinley and his administration issued tariffs of almost 50% to try and level the playing field and protect domestic industries. The outcomes were mixed: while the tariffs provided much-needed protection for certain industries—most notably tinplate production—they were unpopular with the public, and Republicans paid the political price in subsequent elections.
- While all the current volatility feels uncertain and unsettling, we believe that if it weren’t for all of this tariff noise, it would be something else entirely. The market had reached elevated valuations before this tariff episode began. A sell-off was likely, giving new buyers a chance to step in at more attractive levels. At present, the market seems to have found a new trading range on the S&P: 4800 to 5400. This will not go on forever.
- The end of the quarter saw a wave of indiscriminate selling driven by fear. Analysts have speculated everything from a looming recession to a complete reset in corporate earnings expectations due to recent presidential actions. While that outcome is possible, we remain confident in our approach — and it’s not rocket science. We invest in the highest-quality companies’ money can buy. These are durable businesses that matter in any economic environment and have weathered many challenges. J.P. Morgan, Berkshire, and other resilient companies aren’t suddenly worth 20–30% less than they were a week ago.
These are our tips for navigating the volatility:
- Remember, you own the best. America still has a fundamentally stable economy, and this period will pass. The economy is resilient, though challenged. This mayhem creates the opportunity to buy companies we love at better prices.
- Let us worry for you — and here’s a hint: we’re not worried, thanks to our long-term strategy. In fact, we’d say you’re in a better position than most because of it. Much of the recent market movement is panic selling — triggering tax bills and the burden of timing a re-entry.
- Finally, if you’re feeling nervous, worried, or even just unsettled, we encourage you to call or email us. We always welcome the opportunity to catch up, and a big part of our role is helping you rest easier — especially in times like these.
2025 Q1 Commentary
- The S&P 500 posted its worst quarterly return since Q3 2022, as policy uncertainty weighed heavily on investor sentiment.
- Optimism at the start of the year gave way to caution as tariff-related headlines dominated the narrative.
- Analysts lowered Q1 2025 earnings estimates across ten of eleven sectors — most sharply in Materials (-17.6%) and Consumer Discretionary (-10.4%). Full-year estimates also declined by 1.6%, slightly above the typical first-quarter trend.
- The market rotated away from the “Magnificent 7,” with renewed interest in sectors like Energy (+10.6% Q1) and Healthcare (+5.6%) that showed more resilient fundamentals.
- Investors sought broader exposure outside mega-cap tech, contributing to a shift in leadership — though a clear new trend has yet to emerge.
Why Our Strategy for Clients Make the Most Sense Now
As you know, we employ a Dollar Cost Averaging (DCA) strategy, which allows us to steadily buy high-quality companies when there’s a disconnect between price and true value. By purchasing in smaller amounts over time, we smooth out market bumps and corrections. It’s also important that we remain disciplined in our approach to investing, and not abandon our strategy during short-term volatility — that’s reactionary investing, and it rarely works.
The best thing you can do right now is resist the urge to check your accounts too frequently. These are paper losses — nothing is real until it’s realized. This isn’t “the end.” It’s a speed bump. No long-term investor has built wealth without enduring periods like this. This will become one of those stories we tell in hindsight — not something that defines your future. Another helpful practice is to limit your exposure to the relentless bombardment of “news”, either online or TV. The media thrives on sensationalism, and they’re very good at using it.
We’re here to help you think clearly through moments like this. Please use us. Relying on a long-term philosophy — as we always have — remains the best way to access markets without taking on unnecessary risk.
As Warren Buffett said: “We simply attempt to be fearful when others are greedy, and greedy when others are fearful.”
Regards,
Zandy Campbell, AIF® | Founding Principal
Alec Campbell | Vice President & Investment Advisor
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