Jul 31 • 4 min read
7 Favorite Investing Charts (July 2025)
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Today, I’m sharing 7 of my favorite investing & economic charts from last month. These charts cover topics such as:
Let's dive in. 👇 Favorite Charts (July 2025)#1 - The Dollar Has Dropped… But It’s No Crisis One of the most overlooked investment stories this year? The decline in the U.S. dollar. While headlines have been dominated by tariffs and inflation, the dollar's value has quietly slipped (see Chart #1 below). And yes, currencies fluctuate over time—that’s normal. But if you zoom out (see Chart #2), you’ll see something most news outlets aren’t mentioning: even after this year’s drop, the dollar is still higher than it was for most of the past 20 years. That’s not exactly the currency crisis being hyped. Another important observation from the long-term chart: the dollar tends to surge during times of genuine economic distress—like the 2008 financial crisis, the early days of COVID in 2020, and the inflation panic of 2022. That hasn’t happened this year, despite plenty of talk about a looming recession. So what gives? Maybe the dollar (and the stock market) sees something the headlines don’t. Maybe not every scary-sounding risk is actually a risk worth acting on. The dollar since January 1, 2025: The dollar since 2006: #2 - How International Markets Benefit From a Weaker Dollar Regardless of broader market conditions, international markets typically benefit when the U.S. dollar weakens—a trend clearly evident this year. As illustrated in the chart below, this isn't just a short-term phenomenon; it's part of a longer-term historical pattern. Historically, international markets have tended to outperform during periods when the dollar weakens, whereas U.S. markets typically perform better during periods of dollar strength. Given the inherent unpredictability surrounding future market returns, currency shifts, and other economic factors, this underscores a core principle in investing: the necessity of diversification. #3 - Why Current Recession Indicators Point to a Healthy Economy Another reason the dollar might not be rising during this period of economic uncertainty is that the U.S. economy is, surprisingly, healthier than many people realize. Key recession indicators—including employment, consumer spending, and payroll data—show continued economic strength despite various headwinds. This resilience is unquestionably positive news. Of course, conditions can change quickly, but for now, the data paints an encouraging picture of economic stability. #4 - U.S. Households Are Financially Stronger Than They've Been in Decades In addition to economic stability, U.S. households are in remarkably good financial shape. According to the Federal Reserve Board, American households currently have less debt relative to their net wealth than at any point since the 1960s. This historically low leverage positions consumers exceptionally well to weather any potential economic storms ahead. #5 - Why Market Forecasts Often Miss the Mark This year’s shifting market forecasts remind us of a critical lesson: predicting the future is exceptionally difficult, even for Wall Street's experts. At the end of 2024, major investment houses confidently projected continued market growth throughout 2025. Then came an unexpected tariff scare, prompting widespread downward revisions. When the tariff threat proved less severe than anticipated, forecasts were adjusted once again. This scenario highlights a simple truth—forecasters often excel at explaining what has already happened rather than predicting what will happen next. Keeping this perspective helps investors maintain a healthy skepticism and reinforces the value of long-term investment strategies. #6 - Putting This Year's Market Performance in Perspective Amidst dramatic headlines and significant volatility, this year's market performance has surprisingly been quite average. Given the frequent noise and disruptions, the market’s year-to-date return stands out precisely because it remains within typical historical norms. This reinforces our core advice: staying disciplined and maintaining your investment course through market ups and downs. As we often remind our clients, “If you never sell, you never have to regret having sold.” #7 – Why All-Time Market Highs Shouldn't Worry You Every time the market hits new all-time highs, many investors understandably brace for a downturn. It feels intuitive—what goes up must come down, right? Ironically, history shows us something quite different. Surprisingly, market returns in the 12 months following new highs have historically been higher than average. Extending that timeline to 24 and 36 months, returns normalize to about average, which—let's not forget—is still quite good! The takeaway here is clear: new market highs aren't a signal to panic. Instead, they're often part of the natural progression of a healthy, growing market. Staying invested through these periods typically rewards investors far more than attempting to time the next downturn. Bottom LineCertainly, there are numerous concerns grabbing our attention these days. But let’s face it: There's always something that can cause worry! Yet, despite all the challenges we've seen this year, the market, economy, and consumer spending continue to display remarkable strength. This resilience has surprised just about everyone—from the Fed and economists to the media and market pessimists. In my view, this ongoing resilience is a powerful reason for optimism as we look ahead. It underscores the importance of staying the course and keeping perspective, even when headlines feel overwhelming. 📚 What I've Been Reading
Thank you for reading! Please reply to this email with comments, questions, and/or feedback. Stay wealthy, Taylor Schulte, CFP® |