In the universe of investment management firms similar to Woodstock, we were an early adopter of the Global Investment Performance Standard (“GIPS”). We decided to have a large composite be our flagship:[1] our Growth Composite, which has covered over 80% of assets under management at Woodstock for 20 years. Clients included in the Growth Composite range from grandparents to grandchildren and include those drawing from their account and those accumulating. Most are taxable accounts. On June 30, 2025, we reached 20 years of performance recording under GIPS.

The S&P 500 Index returned 11.0% in the second quarter of 2025, fully recovering from its -21.3% peak-to-trough sell-off after bottoming on April 7, and finished the mid-year at an all-time high. Investors were relieved in April when President Trump revealed his more pragmatic side, quickly deferring the tariffs he had announced on April 2. Investors have since grown more accustomed to his negotiating strategy of taking extreme positions before walking them back.

While the US stock market recovered to all-time highs, the US dollar had its worst half-year performance since 1973, suggesting stock market enthusiasm may stem more from anticipation of easier monetary policy than from faster economic growth. US stocks underperformed most other world markets in dollar terms. The yield of the 10-year US Treasury bond traded down about one-third of a percentage point from the beginning of the year.

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA) into law. Many of the provisions of the Tax Cuts and Jobs Act (TCJA) of 2017 were set to expire at the end of 2025. OBBBA makes these provisions permanent. These include:

• 10, 12, 22, 24, 32 and 35 percent tax brackets
• Elimination of personal exemptions
• Increased alternative minimum tax exemption and threshold amounts
• Lower limitation on the deduction of mortgage interest
• Limitation of casualty loss deduction
• Termination of the miscellaneous itemized deductions

What do we know about dramatic meltdowns in the US stock market? In our recent memory, we’ve had three. In two of them, 1999-2000 and in 2007-2008, the writing was on the wall well before the fall. In the first, start-up companies with no earnings had colossal stock market valuations. In the second, tiered mortgage-backed securities for homeowners making no down payments were being sold to the general public. The third, in 2020, was in response to the global economy shutting down abruptly in response to the worldwide Covid-19 outbreak.

Post-election optimism around deregulation, tax cuts, and a business-friendly administration has given way to concerns about potential negative economic impacts, especially around how uncertainty may cause consumers and businesses to reduce spending.

The Economic Miracle

The US economy has proven to be surprisingly resilient during its post-COVID recovery. Inflation has come down as employment and real wages have grown, which has enabled the US consumer to maintain high levels of spending. The 2.4% annualized increase in real gross domestic product (GDP) in Q4 2024 (see Figure 1) was primarily driven by increases in consumer spending and government spending that were partly offset by a decrease in investment. Imports, which are a subtraction in the calculation of GDP, decreased.

April is a good time to reflect on our tax system and enforcement. Most Internal Revenue Service enforcement is automated and not done by individual agents. The automation involves matching the 250 million W-2 wages earned forms, the 5.4 billion 1099 miscellaneous income forms, and cash transaction reports filed by banks and other financial institutions to the 165 million individual income tax returns filed yearly. According to the IRS, “it’s not labor intensive.”

The original idea behind the “Page One” article in our Quarterly Market Perspectives (QMP) was to explain why our clients should be at Woodstock and not some other investment firm. One of our portfolio managers, Tom Stakem, says he wants to read something that he can’t find elsewhere. A recent article in the WSJ described good opinion writing as “impressive with its enterprise, originality, passion, boldness, depth, flair or wit.”[1] We try. We also borrow ideas and attribute them extensively. We keep in mind the line often attributed to Oscar Wilde: “Plagiarism is the sincerest form of flattery.”

We began 2024 in a very different place—investors had expected slow growth, or like me, a recession. The Bloomberg consensus estimate for US gross domestic product (GDP) growth was about 1 percent. We expected federal spending would decline following the pandemic response stimulus, while 2022-2023’s steep interest rate hikes were still percolating through the economy, and high overall price levels were expected to crimp consumer spending.

The theory and philosophy around taxation sometimes starts with the US Supreme Court’s distinction between “avoidance” and “evasion.” No American is obligated to pay more than what is required. Measures taken to avoid tax within the rules are fine; measures taken to defeat the rules—evasion—are criminal.

In looking at the universe of investable assets, there are warning signs. Recently, JP Morgan CEO Jamie Dimon lamented that public companies currently number 4,300 in the US, down from 7,300 in 1996. He cited some of the reasons companies are hesitant to go public: “increasingly burdensome regulation, intensifying public scrutiny and a growing obsession with short-term financial results.”[1]  The article highlights the growth in the number of companies choosing to remain private, backed by private equity.