February 2025 Perspective

2025-02-04 08:16:00 ET

Summary

• Despite an underappreciated level of risk, markets have been largely priced to perfection.
• The policy tug-of-war we expect to see in the coming months may create volatility-inducing headlines and pose a risk for a richly valued market.
• We believe that an active approach to investment management will allow investors to strike the appropriate balance between pursuing opportunities and managing risk.

What’s New

We've spilled plenty of ink on this publication's pages over the last several months talking about the potential for an increase in market volatility. Our view has been straightforward – despite an underappreciated level of risk, markets have been largely priced to perfection. Risks included slowing growth, stubbornly high inflation, a new and potentially unpredictable administration, elevated earnings expectations, and severe market concentration. Aggressive positioning only augmented these risks. January provided a stark reminder of what can happen against these backdrops. From our perspective, investors should continue to expect a bumpy road ahead....

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