The first quarter of this year was an especially good time to have the reassurance of high-quality holdings. Growing recession fears weighed on investor sentiment, leading to the first negative quarter for the market since 2023.
The S&P 500 entered correction territory in mid-March with a loss of -10.1% from its high and ended the quarter down -4.3% year-to-date. The more volatile Nasdaq saw a -14.3% correction during the quarter, finishing March down -10.3%. The Magnificent 7 ETF (MAGS), the market leader in recent years, fell -15.7% by quarter end.
Boring stocks prove their value
Boring stocks that garner little attention during the excesses of a bull market prove their value in volatile times. Low-volatility names, dividend aristocrats (companies that have raised their dividend every year for 25+ years), and stocks with a margin of safety built into their price may not be glamorous. But they often hold up well when the market sinks. Historically, they’ve also outpaced the broader market over full cycles (we’re happy to share the data if you’d like to see it).
The more value-focused areas of the market—health care, consumer staples, utilities, and even energy—remain overweight in our active strategies, at the expense of what we view as fully (or even over-) valued technology and communications names.
Bonds did, too
Bonds also demonstrated their defensive qualities in early 2025 as falling interest rates drove bond prices higher. Unlike 2022, when both stock and bond prices declined, bonds have served their role as a hedge against stock market volatility so far this year—while also providing an attractive income source thanks to yields exceeding 4%.
Contact us with questions
If you have any questions about your portfolio, your goals, or our investment philosophy, we’re always happy to talk with you. Contact any of our team members at 800-998-9773 to set up a meeting.
Data Sources: Koyfin, S&P Global, Allied Calculations