Investors Guild 06122025
Investors Guild 06122025
Yes. This is still one of our favorite charts.
Correlations between stocks remain low—meaning companies aren’t moving in lockstep. When they’re low, there’s more potential to generate returns investing in individual stocks vs. just buying a broad-based index. In short: it’s still a market of stocks.
We covered this idea last year, and outlined key drivers. Many of those drivers are still in play—especially interest rates. But now there’s another big force shaping the market: tariffs.
Over the past few months, President Trump has introduced a wave of new tariffs across the globe. Some are flat-rate, while others are more targeted—focused on key sectors like semiconductors, steel, and rare minerals. When you combine this with renewed concerns about the deficit, you get heightened policy uncertainty–discernment in how and where you allocate your capital becomes more important.
The Magnificent 7 still dominates the broad based indices. But even their performance has been more uneven lately. In fact, as the chart shows, the rest of the S&P 500 has enjoyed healthy pockets of outperformance.
Meanwhile, the number of stocks outperforming the S&P 500 has rebounded since the April lows, but the path higher hasn’t exactly been smooth. Right now, about 61% of stocks are outperforming, which is still below the long-term average of 65%.
That means not everyone’s winning and that’s where your homework matters. Discern how tariffs and cost pressures may be squeezing margins. Look for companies built to endure, with resilient business models and a clear focus on profitability. And don’t limit your search to the U.S. For decades, investors have favored US markets, but tariffs are accelerating de-globalization. Undervalued international markets like Europe, Japan and parts of Emerging Markets, can be a place of opportunity.
As we said last year, this is not to say that the broad market won’t or can’t go up over time. It’s more that returns between stocks could vary more, allowing for opportunity for those that want to do the research and pick individual investments.