If you only looked at the year-end numbers, 2025 was a great year for investors.

US stocks finished higher for a third straight year. International stocks outperformed the US with emerging markets leading the way. Bonds also produced positive returns, as inflation fears have waned.

But the road to get here was not a smooth one.

For Q1 2025, US stocks experienced a notable decline, with the Russell 3000 Index down 4.72%. This contrasted sharply with international developed markets, which rose by 6.20%, and emerging markets, which gained 2.93%. Global real estate exhibited moderate growth, up 1.37%. Bonds were similarly mixed, as US bonds increased 2.78%, while global bonds outside the US showed slight weakness, declining by 0.17%.

Trade policy gained prominence as the Trump administration's proposed tariffs sparked global market uncertainty. Interestingly, primary tariff-targeted markets such as Canada, Mexico, and China posted positive stock market returns, echoing patterns from Trump's previous term where contentious trade discussions did not consistently depress target-country stock markets.

US equities continued to build on a strong start to the year, with many market indices nearing record highs in Q3. However, a rise in volatility, unprecedented since the COVID epidemic, accompanied this increasing momentum.