May 29 • 3 min read
Favorite Investing Charts (May 2025)
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Today, I’m sharing my favorite investing & economic charts from the past month. These charts cover topics such as:
Let's dive in.👇 Favorite Charts (May 2025)#1 - We’ve Just Experienced a Historic Stock Market Rebound In just 27 trading days, the market rebounded by more than 19%, marking one of the largest short-term rallies in history. Today, as we hover near all-time highs again, the widespread pessimism that dominated most of this year seems to be fading. While no one can predict exactly what this rally means for the future, history shows that after similar rapid recoveries, the market has consistently delivered positive and robust returns over various time frames. #2 - But Isn’t This Time Different? Yes, it is, but every market environment is unique. Today, even after recent reductions, tariff rates remain higher than they've been since the 1940s, making future outcomes unpredictable. Yet despite these tariffs, the market has shown remarkable resilience. In fact, the recent rally amid such uncertainty highlights a key investing lesson: One of the biggest risks is assuming anyone knows exactly what will happen next and making investment decisions based on that belief. Remember, being wrong can compound forever—and not in a good way. #3 - Inflation Has Remained Stable So Far Consumers and investors have been perpetually concerned about inflation since it peaked back in 2022. Yet, according to last month’s inflation reading, it has continued its descent and is now approaching the Fed’s 2% target. Of course, the aforementioned tariffs may change this, but it’s nice to see that inflation has continued its downward trend. #4 - Inflation Expectations Are Highly Party-Dependent As with many issues, expectations about inflation vary significantly by political party. Republicans generally expect President Trump's policies to have a positive long-term effect on inflation, while Democrats and Independents anticipate higher inflation ahead. Opinions on inflation may differ, and the future remains uncertain. But history clearly shows that owning a diversified portfolio of the world’s best companies is one of the strongest long-term defenses against inflation. #5 - So Far, There’s No Sign of a Recession Investor expectations for a recession have recently increased, but as of now, all six major "recession indicators" remain positive. Even more encouraging is that half of these indicators are performing better than their 2023-24 annualized rates. Although these data points reflect past performance, it’s reassuring that the economy remains strong enough to withstand a potential downturn. #6 - Will Corporate Earnings Decline? Sticking with the recession theme, many investors are now asking if corporate earnings will decline. The simple answer is yes—earnings will decline eventually—but nobody knows exactly when or by how much. As the chart below shows, earnings have historically fluctuated significantly in the short term, but the long-term trend has always been upward. Therefore, whenever the next earnings drop occurs, it’s unlikely to be catastrophic. #7 - Is the U.S. Credit Downgrade a Big Deal? Decades of fiscal irresponsibility by the U.S. government recently led Moody’s to downgrade its credit rating. S&P Global Ratings and Fitch made similar downgrades in recent decades, so this isn't shocking news. Still, it's surprising that Moody’s now rates the U.S. government, which can literally print money, lower than a consumer staples company like Johnson & Johnson, which obviously cannot. It's a strange situation, to say the least. #8 - Time Is the Ultimate Margin of Safety In The Psychology of Money, author Morgan Housel writes: “Optimism is a belief that the odds of a good outcome are in your favor over time, even though there will be setbacks along the way.” To me, this quote perfectly sums up the chart below. Setbacks and uncertainty are inevitable in investing, but staying focused on the long term is clearly the best way to tilt the odds in your favor. The legendary investor and Vanguard founder John Bogle famously advised investors to “stay the course.” Though simple, this advice captures essential investing wisdom, and recent events have demonstrated just how relevant it remains. When Liberation Day arrived and unexpectedly high tariffs were announced, the market predictably plunged. Some investors reacted by selling their holdings, believing they were protecting themselves from further losses. But selling also carries risks, just in a different form. As we've seen, the market quickly rebounded and is now back near all-time highs. Those who exited must now grapple with a difficult question: When do they get back in? Experience has shown that staying the course, despite temporary discomfort, is the most reliable way to capture the full returns the market offers. As the saying goes, “If you never sell, you never have to regret having sold.” Stay wealthy, Taylor Schulte, CFP® |