Markets
We are off to a rough start. In a sharp reversal from last year, the first few months of this year saw domestic equities sell off aggressively with tech stocks leading the way down.
The S&P 500 lost 4.27% through March 31st, with the S&P 400 MidCap and the S&P 600 SmallCap also tumbling 6.1% and 8.93%, respectively.1 Domestic equities have continued to decline in the first few weeks of April.
On the other hand, international performance was significantly stronger, with the S&P Developed Ex-U.S. up 7.81% and the S&P Emerging up 2.44 % for the quarter.1
Fixed Income markets performed well, with the US Aggregate Bond Index yielding 2.41% for the quarter.1 However, the rates outlook grew less certain after the quarter’s end.
Gold delivered a strong start to the year, generating double-digit returns for investors.
We are increasingly constructive about equity markets following the recent volatile sell-off. Additionally, the short- to intermediate-term segments of the yield curve appear reasonably attractive at this point.
Your performance net of fees is posted to your Sage Rhino client portal.
The Fog of (Trade) War
Prussian general Carl von Clausewitz first described the “fog of war” in his 1832 book On War, referring to the confusion and uncertainty military leaders face amid incomplete and chaotic information. Like navigating a literal fog, decisions must be made with limited visibility.
Today, investors face a similar challenge – a fog of trade war. Global economic tensions, shifting policies, and geopolitical conflicts cloud the investment landscape. Tariffs disrupt supply chains, sector performance grows unpredictable, and markets swing with every headline or political soundbite. As in war, clarity is scarce, and outcomes are uncertain.
In such times, diversification is our strongest defense. By spreading investments across equities, fixed income, international markets, and real assets like gold, we reduce reliance on any single region or sector vulnerable to disruption. Our portfolios are built to withstand shocks, as recent sell-offs demonstrated, with international stocks and bonds providing relative stability.
Thoughtful investors face many enemies. Fear is undoubtedly one of the more pernicious ones. Fear is also a wildly misunderstood variable in investing.
Equally important: staying invested. History shows that those who remain disciplined during uncertainty are best positioned when clarity returns. Exiting the market risks missing the recovery. Our approach balances resilience with readiness – weathering today’s fog while staying poised to seize opportunity when the horizon clears.
International Stocks – Revisited
The first quarter of 2025 brought a notable shift in relative performance: international equities meaningfully outpaced their U.S. counterparts. This outperformance was fueled by improving fundamentals abroad and a notable macro development at home – a weakening U.S. dollar.
For much of the past decade, U.S. investors have grown accustomed to domestic stocks dominating global returns. Fueled by world-class growth from large-cap tech and consistent economic strength, U.S. markets have led the charge. But Q1 2025 reminded investors that market leadership is cyclical, and that currency movements can significantly impact globally diversified portfolios.
We highlight this shift not to suggest that international stocks will permanently retake the lead, but to underscore the value of diversification. For years, clients have understandably questioned the role of international equities in a world seemingly ruled by U.S. tech giants. Yet Q1 2025 is a textbook example of market cyclicality and the impact of currency shifts on short- and medium-term performance.
Geographic and currency diversification isn’t about picking winners. It’s about building more resilience across economic regimes. A globally diversified equity allocation mitigates home-country bias and captures opportunities in regions that may outperform under varying economic or policy conditions.
We remain confident in the long-term prospects of U.S. companies and believe American innovation will continue to drive shareholder value. However, valuation gaps between U.S. and international stocks remain wide, and history suggests these gaps tend to mean-revert. A weaker dollar or accelerating growth abroad could sustain international outperformance.
For long-term investors, short-term trends shouldn’t drive strategy. But they serve as reminders: global diversification isn’t just prudent – it’s essential.
Unhappy Anniversaries or The Lessons We Should Have Learned (Twice)
March 2025 marks two somber anniversaries – 25 years since the dot-com bubble burst and 5 years since the COVID-19 global shutdown. Different in nature but similar in impact, these events underscore how markets behave during times of excess and panic, and how investors tend to respond.
The dot-com bust was a reckoning. It followed a period of euphoric optimism, when new technology seemed destined to rewrite the rules of investing. Valuations soared beyond reason. Companies with no profits—and sometimes no products—were worth billions. When the bubble burst, Nasdaq lost nearly 80% of its value, taking 15 years to recover.
COVID was different. It came out of nowhere. One day the world was normal, and the next it was locked down. Markets cratered, then rocketed back with historic speed. Many who sold in March 2020 missed one of the fastest recoveries in market history, while those who stayed the course were rewarded for their discipline.
It’s tempting to see these events as outliers. But if you invest long enough, you start to see that there is no “normal” in the market. Just a constant pendulum swinging between greed and fear, hope and despair. The dot-com crash and COVID were not bugs in the system. They are part of the system.
There are a few lessons worth revisiting – lessons that, if remembered, can make you a better investor. Not smarter, not faster, not better at timing – just better prepared.
- The crowd is often wrong at extremes:
In 1999, the digital future was real, but investors overpaid for it. In 2020, many feared the world was ending and sold, missing historic gains. The lesson here isn’t to fade the crowd at every turn. It’s to be extra cautious when consensus peaks, because agreement often signals high costs for being wrong.
- The right strategy feels uncomfortable in real time:
Holding on in March 2000 as tech stocks plunged? Excruciating. Staying invested in March 2020 as the world shut down? Terrifying. Long-term investing isn’t about timing crises but surviving them. Often, survival means doing nothing when instinct screams to act.
- Conviction outweighs intelligence:
A solid plan you stick to beats a brilliant one you abandon. Conviction keeps you invested during declines and enables rebalancing when it feels counterintuitive. Conviction isn’t built on blind optimism but rather is rooted in history’s lesson: markets recover, progress persists, and patience pays.
- Diversification is humility in action:
The dot-com era exposed the risks of concentration; COVID reminded us how quickly the world can change. A well-diversified portfolio is a way of saying: “I don’t know what’s going to happen, and I don’t need to.” A well-diversified portfolio acknowledges uncertainty, spreading risk across sectors and regions to thrive over time.
- Every generation has its own scar tissue:
The reason these events remain so powerful is that they hurt. Pain is a great teacher. The dotcom bust taught us not to fall in love with stories. COVID showed us markets can behave irrationally both on the way down and the way up. These scars carry wisdom—use them.
Thank you for your continued support
1 “Index Dashboard: U.S.,” S&P Dow Jones Indices, September 30, 2025
Sage Rhino Capital, LLC is a Registered Investment Adviser. This report is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Sage Rhino Capital, LLC and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Sage Rhino Capital, LLC unless a client service agreement is in place. Account statement from the custodian is the official record of holdings, balances and security values. Sage Rhino Capital does not provide tax advice.