Wednesday, July 16, 2025
If you were to list the top exporters to the United States in order from biggest exporter to the smallest exporter, which one of the following three countries would be first, second and third place? Canada, China and Mexico. The answer: First place goes to Mexico, second place to Canada and third place to China. China held first place for two decades! Moreover, for 39 consecutive months and for 61 months out of that past 68, the US has been a net exporter of petroleum products! Ten years ago, most people would not have guessed that Mexico would take over China as lead exporter to the US just like 40-50 years ago no one in their right mind would have said the US would be a net exporter of petroleum products. My point to all of this is that the only thing you can count on is change and trying to predict which areas to invest in can be challenging – if not impossible. That is where diversification comes in and, boy, are we glad we owned diversified portfolios in the first six months of 2025.
With erratic trade policy out of Washington continuing to unsettle markets, fixed income and foreign stocks are helping our total returns so far this year. Our bond funds like Dodge & Cox Income, Vanguard Core Bond and Vanguard Short-Term Inflation Protected Securities are all up over 4% while PIMCO Income is up over 5% in 2025 so far. First Eagle Overseas is up over 20% while Dodge & Cox International is up over 22%. Berkshire Hathaway has been struggling ever since Warren Buffett announced his retirement at the end of this year, but through the quarter-end it was still beating the S&P 500. Speaking of index funds, our total stock market fund is up 5.67%, which is a significant turnaround from the April low of -15.68%. We have President Trump’s somewhat softening trade stance along with a stock market that seems to be shrugging off the US trade negotiations so far this month for this 180- degree flip of the US stock market.
The last time overseas stocks beat US stocks by 10% or more was 2002 – 23 years ago! This is truly unprecedented, and it will be interesting to see if it holds up for the remainder of the year. In the meantime, I am not anticipating many portfolio changes in the months ahead. Please be sure to call us with any questions regarding your portfolio positioning or portfolio total return.
If you have not stopped in to see us lately, please do not hesitate to contact me to schedule an appointment. Enclosed you will find your Portfolio Holdings, Performance Analysis and Position Performance reports as of June 30, and a quarterly Account Management Fee Statement. Please call us should you desire the most recent copy of our Form ADV Part 2A. In addition, do not forget to notify us should your investment objectives or personal financial situation change.
Enjoy the warm summer months!