Q1 2025
Key Takeaways: Don’t Just Listen—Look Closer
AI’s Shine Dulls: The AI trade lost some of its glow. Overhyped? Overbought? Or just overdue for a reset? We’re staying grounded—and underweight.
Global Markets Whisper a Comeback: While the noise was all about U.S. dominance, international stocks quietly took the lead. A reminder: true diversification rarely shouts.
Tariffs Return, So Do the Hot Takes: Headlines screamed recession and inflation. But the actual data? Not nearly as loud—or alarming.
I’m not quite sure where I first heard this phrase—maybe from my grandfather, maybe from Buffett or Munger—but I’ve long tried to live by the mindset: “Watch what people do, not what they say.”
Flashy people and trends tend to be the loudest in the room. They get the headlines. They dominate conversations. But more often than not, it’s the humble ones—the ones not seeking attention—that have staying power.
That principle perfectly captured Q1 2025. While the loudest market narratives shouted about AI dominance, U.S. exceptionalism, and looming inflation disasters, the actual actions and data told a more nuanced—and far more interesting—story.
Let’s break down the quarter not by noise, but by substance.
1. AI and Tech: From Hype to Humility
Artificial intelligence didn’t disappear in Q1—but the trade started to lose its halo.
The year began with enormous optimism around generative AI. Companies were sprinkling ‘AI’ into earnings calls like parsley on a plate (and honestly, I’ve never liked parsley). Stock prices had soared. But then came the debut of DeepSeek, a Chinese model, and sentiment started to cool.
Valuations on mega-cap tech—already stretched—looked suddenly vulnerable—just as we cautioned in our last commentary. The average P/E multiple on the “Mag-7” dropped ~31% from recent highs, as investors remembered: yes, competition still exists. The market began to ask: “Is all this priced in already?”
So the rotation began. Tech cooled. Investors moved into more attractively priced areas—like international equities (which we’ll touch on next).
Let me be clear: I still believe many of these companies are great businesses—some are just okay—but many have now moved from glaringly overvalued to simply fully valued.
I still believe AI is a transformational technology. But history has shown that while innovation excites early, it often takes years before it monetizes in a meaningful way—especially when capital expenditure is this high. Will all this spending produce real, lasting ROI? Unclear.
With full valuations and frothy sentiment, it’s tough to get overly constructive on tech right now. That’s why we remain underweight.
2. International Equities: The Quiet Comeback
For years, owning international stocks has felt like running into the wind. U.S. markets—especially tech-heavy names—outpaced their global peers quarter after quarter.
But in Q1 2025, that flipped.
MSCI EAFE (developed international markets) outperformed the S&P 500 by ~12%
MSCI Emerging Markets beat the S&P by ~9%
And what happened? Suddenly, some voices started shouting: “International is back!” “American exceptionalism is dead!” “The U.S. dollar is collapsing!”
Here’s where we return to our theme: Watch what people do, not what they say.
Let’s look at the facts:
From Q4 2024 through Q1 2025, U.S. and international markets are essentially even.
The U.S. dollar? Barely budged—down just 1.5% from Q4 2024 through April.
So no, this wasn’t a sea change—it was a pendulum swing. The hype from late last year normalized. Valuations reset. Leadership rotated. And people, as they tend to do, overreacted.
This is exactly why we diversify. Not because we know when leadership will change, but because overconfidence in a single “story” rarely ends well.
That said, I don’t think U.S. exceptionalism is dead. I do think some international stocks make a ton of sense, especially when you can buy fundamentally similar global businesses at a discount—just because they trade outside the U.S.
Still, I believe a U.S. overweight remains warranted. Why?
Better businesses
Better business environment
A more dynamic, resilient economic system
And this isn’t a political statement. This is personal. Where else can a “10-year-old investor”—born with the chips stacked against him—get a shot at his dream because his grandfather taught him the value of investing?
Only one place. The USA. Exceptionalism isn’t gone. It’s just got quieter this quarter. And that’s perfectly fine with us.
3. Tariffs, Inflation & Recession: Headlines vs. Reality
Tariffs made a loud return in Q1. On April 2nd, new tariff announcements dropped. Cue the headlines:
“Tariffs will drive up inflation!”
“Recession is imminent!”
Another perfect case of: watch what people do, not what they say.
I even recorded a podcast episode on tariffs (go give it a listen—and maybe subscribe 😊). But here’s the gist:
Tariffs aren’t inherently good or bad. Like everything in life, they come with trade-offs. In economics, the “weakest hand” absorbs the cost—and that varies by deal. Sometimes it’s a country, sometimes a company, sometimes a consumer. Often, it’s a combination.
After the April 2nd announcement and the media frenzy that followed, I picked up The Art of the Deal. Not for political reasons, but to better understand how the President might be thinking.
If you don’t want to read the whole thing, focus on Chapter 2. Key takeaways:
“Think big”
“Maximize your options”
“Use your leverage”
It’s classic shock-and-awe, followed by recalibration. And we’ve already seen that play out. Cooler heads are prevailing. Negotiations are underway. Leverage is being used strategically.
My view? Deals will get done. Some tariffs will stick, others will fade. But global trade will adapt. Some costs will be absorbed by companies. Some will shift to consumers. But markets will find their footing.
Meanwhile, the actual economic data doesn’t support the panic:
Consumer spending is holding up
Business investment remains strong
Unemployment is at a still-modest 4.2%
The lesson? Don’t let headlines dictate your outlook. Every policy has pros and cons. Our job is to weigh them objectively and stay grounded in logic—not fear.
As I often remind clients: “Numbers don’t lie. People do.” Let’s keep looking at the numbers.
Closing Thoughts: Stay Disciplined, Stay Focused
In investing—and in life—it’s easy to get distracted by the hype, the headlines, and the hot takes. But success isn’t built on reaction. It’s built on discipline.
This quarter reminded us of something powerful: Watch what people do, not what they say.
While some screamed about AI dominance or U.S. decline, international diversification delivered. While others panicked about tariffs, markets steadied. And while sentiment dipped, consumers and businesses kept buying.
At Julius Wealth Advisors, we’re staying the course:
Humble > Flash
Data > Headlines
Long-term > Short-term
Just like in football—the quarterback might get the attention, but success happens because of the nameless offensive line doing the work. And we’re proud to be that steady presence for our clients.
Truly yours,
Jason Blumstein, CFA
CEO & Founder
Julius Wealth Advisors, LLC
Let’s Connect and Focus on What Matters
Headlines will keep shouting. Markets will keep swinging. But building lasting wealth requires more than reacting—it requires staying grounded in data, behavior, and long-term thinking.
Let’s connect and make sure your financial strategy is built to look past the noise, stay disciplined through the cycles, and capture what truly drives results.
Success doesn’t follow the loudest voice. It follows the smartest plan. Let’s put yours to work.
Disclosures:This piece contains general information that is not suitable for everyone and was prepared for informational purposes only. Nothing contained herein should be construed as a solicitation to buy or sell any security or as an offer to provide investment advice. The information contained herein has been obtained from sources believed to be reliable, but the accuracy of the information cannot be guaranteed. Past performance does not guarantee any future results. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. For additional information about Julius Wealth Advisors, including its services and fees, contact us or visit adviserinfo.sec.gov.