By Tim Russell, President & Wealth Manager at Life Financial Group
Originally shared on the Life in the Markets podcast — 07/21/2025
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Market Recap: Another Week of Gains
Last week, the markets continued their positive momentum: It’s become a familiar trend: new all-time highs. But this leads to a common concern—“Is the market too expensive to invest in right now?”
Understanding Market Valuations
The current earnings multiple of the S&P 500 is around 22 times earnings. What does that mean?
If a company makes $1 of profit, the market is valuing it at $22. Essentially, it would take 22 years of current profits to equal today’s market price.
That’s high, and it naturally makes investors cautious. But let’s put this into perspective:
- Historically, the market trades at all-time highs about 17% of the time.
- If you widen the lens to consider days when the market is within 5% of an all-time high, that number jumps to 45% of all trading days.
So, while buying at the top feels risky, historically the market spends nearly half its time near its highs.
Diversification: A Smarter Approach
We don’t recommend buying single hot stocks just because they’re up. For example, Nvidia soared 200-300% in recent years but has since pulled back.
Instead, we encourage:
- Diversification across companies (don’t put all your eggs in one basket)
- Diversification across asset classes (stocks, bonds, mutual funds, etc.)
For our clients, we’re not just buying the S&P 500 at current prices. We’re spreading investments across a wide range of asset classes—some of which may be more reasonably valued right now.
Inflation and Interest Rates
Inflation remains stubborn around 3%, despite the Federal Reserve targeting 2%.
While many feared tariffs would drive inflation higher, so far, we haven’t seen a significant inflationary spike. It could be too early to tell, but as of now, the economy is holding steady.
It’s important to remember that government policy can only do so much. The markets and inflation often move according to broader economic forces, regardless of policy intentions.
Looking Ahead: The Federal Reserve and Rate Cuts
There’s been discussion about whether Donald Trump might replace Jerome Powell as Federal Reserve Chair.
If he does, we could see:
- 3 to 4 rate cuts (if a replacement happens soon)
- 1 to 2 rate cuts (if Powell remains in place until his term ends)
Either way, interest rates are likely headed down, but the exact number of cuts depends on the political landscape.
Economic Outlook for This Week
We’re in the early stages of earnings season. So far, banks have reported better-than-expected results, and the most recent stress tests show that the banking system is healthy and robust.
Key data points to watch this week:
- New home starts
- Existing home sales
- Earnings reports from:
- Tesla
- Coke
- IBM
Coca-Cola’s report will be particularly interesting—it serves as a bellwether for consumer health and inflation impact on household goods.
Stewardship and Long-Term Investing
We don’t invest based on short-term news. Whether it’s a market upswing or a government surplus, we invest for long-term growth—10, 15, even 20 years into the future.
Stick to your principled investment approach. Historically, this method has led to success.
What’s Coming Next?
I’m currently working with Angel Sotomayor, CPA and Financial Advisor, to prepare a deeper dive into the “Big Beautiful Bill” and what it means for your finances.
We’ll cover this on both:
- The Stewardology Podcast
- Life Financial Group’s podcast channel
Stay tuned! Make sure you’re subscribed so you don’t miss it.
Verse of the Week
“The plans of the diligent lead to profit as surely as haste leads to poverty.” – Proverbs 21:5
Success often comes from planning, hard work, and diligence. When we fail to prepare, poverty or failure is often the result. As a friend of ours put it recently: “Working works.” God designed the world in such a way that hard work, stewardship, and using your gifts wisely tend to lead to positive outcomes. So let’s continue to work diligently, serve others, and trust the Lord in the process.
Disclaimer: The topics discussed here are for informational purposes only and do not constitute specific investment advice. Investing involves risks, including potential loss of principal. Past performance does not guarantee future results. Securities and advisory services offered through Genios Wealth Management, member FINRA/SIPC.
