By John Stewart, chief investment officer at Farmers Trust Co.

Week in Review: What a Week it Was

I was sitting at dinner Saturday night when I pulled out my phone to notice that Weekend Wall Street, which is a website that tracks potential moves in the stock market over the weekend when markets are all closed, was indicating a drop of more than 1% in the broad equity indexes.

At first I had no idea why, but upon looking at the news headlines saw that the U.S. had bombed Iran’s nuclear facilities and talk of the potential for Iranian retaliation was rampant.

When oil futures opened Sunday night, they were up 4% and the S&P was down one-half of one percent.

By the end of trading on Monday, the S&P was up 1% and the price of oil was down nearly 10% from Friday’s market close as discussions around a cease fire and an agreement between Israel and Iran materialized.

Now stocks are pushing to new all-time highs as more good news keeps rolling in.

For those of you playing at home, this is a good lesson in why trading headlines can be a recipe for disaster – you never know what the next headline will be and how quickly markets will shift.

Taking more risk doesn’t necessarily lead to more reward.

For one, there are reckless risks that are likely to lead to a lot of pain, or worse.

Even reasonable risks are still called “risks” for a reason – they don’t always pan out the way you hope.

Investing is about finding opportunities where the PERCEIVED risk is great, but the ACTUAL risk is somewhat lower.

In other words, you want to buy low expectations, because low expectations mean you’re getting a good deal for whatever you’re buying, and the bar isn’t very high to outperform those expectations.

It probably goes without saying that the reverse of this is also true.

Looking Ahead: Turbulent First Half Comes to a Close

Depending on when you’re watching this, the first half of 2025 is either very close to being history, or it already is – it went pretty fast if you ask me, but it was certainly anything but dull.

We had an S&P 500 that was down close to 20% at the lows but finished the first half of the year up nearly 5%. Despite all the equity market volatility – interest rates, and therefore bonds, barely budged and have been trading in a tight range for the past several months.

So what will the story be for the second half?  Well, prediction is difficult, especially when it’s about the future.  However, if the first half is any indication, there are likely to be plenty of surprises.

On the bright side, there still seems to be a lot of pessimism out there, and institutional investors are still positioned rather defensively.  This creates the potential for more upside in the stock market as many start to play catch up given the improving outlook going forward.