Roller Coasters Aren’t for Everyone: Volatility in 2025

By: Bill Tracy, Portfolio Manager

Innovation isn’t just for AI; it’s found in every corner of tech, including ones you might not think of, like, say … roller coasters.

For coaster enthusiasts, no amount of adrenaline is enough, and the tech needs to keep finding new ways to thrill them; Six Flags Over Texas is about to launch a six-world-record-holding behemoth in 2026 that includes something called a “giga dive.”

But when it comes to investing? Most of us would prefer a smoother ride. Still, 2025 gave us a bit of that coaster-style excitement. And while the year is ending on a high note, it wasn’t all loop the loops and cheers. Let’s roll tape.

FROM FREEFALL TO RECOVERY

The S&P 500 was up a healthy 15% as the end of the year closed in, which might make it easy to forget the “great large growth bear market of 2025.” Between mid-February and early April, the S&P 500 Growth Index – packed with tech and communication giants – plunged more than 22%. At the same time, the CBOE Volatility Index (aka the VIX, a technical measure of investor “jitters”) spiked to levels we hadn’t seen since the early pandemic days of 2020. Investors were bracing for impact.

TARIFFS, TRADE WARS AND TURBULENCE

The volatility surge was sparked by a flurry of tariff announcements from the U.S., followed by retaliatory moves from global trading partners. The ripple effects were immediate: Market-based inflation expectations jumped, bond markets priced in fewer rate cuts and stock markets tumbled. International stocks weren’t spared either. Developed and emerging markets felt the sting of trade tensions. But for U.S. investors, the pain was softened by a declining dollar, which gave a boost to global equity returns.

MARKETS MOVE FAST – AND SO CAN RECOVERIES

Just like a roller coaster’s twists are powered by energy, gravity and friction, global markets are driven by a complex mix of economic data, policy decisions and investor sentiment. And as we saw this year with the S&P 500, sharp drops can be followed by swift rebounds. As the tariff drama played out, markets seemed to shift their focus back to fundamentals: corporate earnings, inflation data and the Fed’s next moves. In any case, stocks slowly climbed back uphill.

ZOOMING OUT: A SMOOTHER RIDE?

When the final numbers for 2025 roll in, many equity asset classes may likely show solid gains. But for investors glued to daily headlines, the ride may have felt more like a stomach-churning plunge than a steady ascent. That’s why we always emphasize long-term perspective. Zoom out, and those wild swings can start to look more like gentle hills. The key is to stay buckled in: diversified, disciplined and focused on your goals.