Resilient Markets

Equity markets have proven resilient this year - one might even say "incredible." Tariffs, labor market, and even media hysteria have not been able to derail the general

bullish trend in 2025. The inspiration for this week’s musings is the hit TV show “The Incredible Hulk." Here’s some trivia about the show:

• Most people born after 1990 have little knowledge of the show that ran for 5 seasons, airing from 1977 until 1982. Most people just know Mark Ruffalo, who plays both Banner & the Hulk in the Marvel/Disney reboot. The TV show, however, had success in its Friday night time slot and finished in the Nielsen rankings at #26 in 1977-78.

• In the TV show, Bill Bixby played Dr. David Banner, while the Hulk creature was played by bodybuilder Lou Ferrigno. Originally, the show's producer Kenneth Johnson pegged Richard Kiel (who portrayed 'Jaws' in the James Bond series) as the Hulk. However, while filming the pilot, they noticed he wasn't "bulky enough" and the scenes were re-shot with Ferrigno.

• Bixby and Ferrigno never watched each other filming scenes of the show because the Banner was not supposed to remember his actions as the Hulk. This allowed the two actors to play their roles independent of each other.

• While filming the opening credits for the show, a scene involves the Hulk pushing a car down a hillside. During filming of that scene, the steel cable that was supposed to help Ferrigno lift the car broke. After already working for 18 hours, Ferrigno became frustrated and lifted the car himself instead of waiting for the special effects team to repair the cable. The original filming was left in the opening credits.

Here's what we've seen so far this week..

Incredible Markets. One of the hallmarks of "The Incredible Hulk" TV show was that each episode ended with David Banner walking down a lonesome road and

hitching a ride to his next destination because the Hulk had destroyed his chances of remaining at his last destination. Sad piano music would play as Dr. Banner walked down the road. That's how some investors and pundits have felt this year by guessing the market would tank. Instead, the S&P hit fresh all-time-highs this week. In fact, the S&P is up more than 25% over the last 3 months. That's not necessarily a reason to worry as future returns have historically been positive over the following 3, 6, and 9-month periods going back to 1950.

The strategy known as "buying the dip" has worked well this year. While it's not a strategy for every investor, those who can stomach risk have seen it work nearly as well this year as it did in 2020 - and with none of the same stimulus we saw in 2020. In fact, buying the dip has worked well in a majority of the outcomes since 1985. In early April, when the S&P 500 Index was nearly 18% off its highs, most investors would not have wanted to step in a buy, but that was exactly the right strategy at the time. Long-term results are more important than short-term focus.

Anger Issues? The White House and the Fed remain at odds over the current level of interest rates. In fact, as we've stated before, those at the Fed seem to be

at odds with one another over future Fed policy. According to the minutes released from last month's FOMC meeting, the officials are divided into three groups: the first (largest group) sees one cut this year, but not in July; the second group sees no cuts this year; the final group suggests a cut as soon as the next meeting. Currently, the market is pricing in a 93% probability of no rate cut in July, with a 63% probability of a rate cut in September.

Meanwhile, the President is commanding the Fed to cut rates as low as 300 basis points this week on social media, even threatening to fire Fed Chairman Powell over the current level of interest rates. And yet, the minutes from last month's meeting cite members as fearful of the "persistent tariff impact on inflation." While custom duties revenue has risen substantially, inflation has not. As our friends at @zerohedge noted earlier this week, can we at least get any tariff impact on inflation first before we worry about persistent impact?

Cost of Waiting.  As a child, I loved the TV show "The Incredible Hulk." However, the premise of the show never seemed to collide with my sense of reality. If Dr.

Banner has just embraced his power and played the part of the hero, he could have at least saved himself all of those hitchhiking trips. But, the best laid plans of mice and men... If we, at least as investors, could stick to our plans, even when they go awry sometimes, we would likely be better off in the long run. Our expectation of ease is quickly met with the harsh effects of reality when our plans don't go smoothly. However, it's in those twists and turns that we get to adjust our plans ever so slightly and employ winning strategies.

By saving early and often, investors can take advantage of the markets when equities pull back and prices go lower. Starting early and consistently investing from age 25 to 65 is better than other strategies such as staying in cash, stopping investing, or starting late. If investors can grasp this concept, it will prevent them from being swayed by biased financial media or chasing the returns of an arbitrary index.

Don't make him angry...

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Disclosures

The information contained herein is for informational purposes only and is developed from sources believed to be providing accurate information. The opinions expressed are those of the author, are for general information, and should not be considered a solicitation for the purchase or sale of any security. The decision to review or consider the purchase or sell of any security should not be undertaken without consideration of your personal financial information, investment objectives and risk tolerance with your financial professional.

Forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.

Any market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.

Past Performance does not guarantee future results.