The behavioral challenge. Thinking long term in turbulent times | ClariVest Asset Management a boutique manager of Raymond James Investment Management

“

ClariVest Asset Management

The behavioral challenge

Thinking long term in turbulent times

”

-

The behavioral challenge: Thinking long term in turbulent times

Policy uncertainty, tariffs, debt, and stagflation are making markets frenetic, but we believe investors should try to take a long-term view, as difficult as that is from a behavioral standpoint. The underpinning of American exceptionalism is an entrepreneurial spirit, technological innovation, and easy access to capital. This ecosystem allows companies and consumers alike to thrive – even when uncertainty increases. At the same time, outside the United States, countries have taken steps to mitigate the impact of U.S. tariffs.

In the first half of the year, the S&P 500 Index completed a round trip, wiping out previous losses. While soft data from surveys has been concerning, hard data has so far been more comforting. Corporate earnings have not deteriorated significantly, and though company guidance has generally been murky, the U.S. ecosystem promotes business agility. Secular AI momentum coupled with a resilient consumer should likely support continued growth in the second half. American exceptionalism is less ephemeral and more entrepreneurial.

Non-U.S. markets advanced significantly since the start of the year as several catalysts have emerged. The European Central Bank has cut rates four times (even as the U.S. Fed has held steady). Germany enacted a massive 500 billion euro infrastructure package and exempted defense spending from the country’s debt limit. Excitement is building around China’s potential in AI due to the recent unveiling of DeepSeek and other large language models. Sentiment toward Japan is improving due to ongoing corporate governance reform and Japan’s long-awaited exit from deflation. These catalysts are magnified by a favorable valuation backdrop.

The best approach to this reign of uncertainty is good risk control and looking through the noise to the longer-term fundamental trends.
The elixirs helping non-U.S. markets (along with their supportive valuations) are likely to be constructive over the second half of the year.
The first half has shown that markets are not a zero-sum game. It is perfectly possible for both the United States to avoid a bear market and for non-U.S. markets to turn in strong numbers. This sort of relative non-U.S. outperformance is precisely what occurred from 2003 to 2007 (see chart below).
All this said, investors must remain cautious of a worsening geopolitical environment and long-term interest rates driven higher globally by investor impatience with rising fiscal deficits.

S&P 500 Index return minus MSCI ACWI (All Country World Index) ex USA return

Source: Bloomberg, as of 5/31/25.

Risk Information:

Investing involves risk, including risk of loss.

Diversification does not ensure a profit or guarantee against loss.

Disclosures

Index or benchmark performance presented in this document does not reflect the deduction of advisory fees, transaction charges, or other expenses, which would reduce performance. Indexes are unmanaged. It is not possible to invest directly in an index. Any investor who attempts to mimic the performance of an index would incur fees and expenses that would reduce return.

This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature, or other purpose in any jurisdiction, nor is it a commitment from Raymond James Investment Management or any of its affiliates to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical, and for illustration purposes only. This material does not contain sufficient information to support an investment decision, and you should not rely on it in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and make their own determinations together with their own professionals in those fields. Any forecasts, figures, opinions, or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions, and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements, and investors may not get back the full amount invested. Both past performance and yields are not reliable indicators of current and future results.

The views and opinions expressed are not necessarily those of the broker/dealer or any affiliates. Nothing discussed or suggested should be construed as permission to supersede or circumvent any broker/dealer policies, procedures, rules, and guidelines.

Sector investments are companies engaged in business related to a specific sector. They are subject to fierce competition and their products and services may be subject to rapid obsolescence. There are additional risks associated with investing in an individual sector, including limited diversification.

International investing presents specific risks, such as currency fluctuations, differences in financial accounting standards, and potential political and economic instability. These risks are further accentuated in emerging market countries where risks can also include possible economic dependency on revenues from particular commodities or on international aid or development assistance, currency transfer restrictions, and liquidity risks related to lower trading volumes.

Definitions

American exceptionalism, also known as U.S. exceptionalism, is an idea centered on the notion that the United States is a unique and even superior nation as a result of historical, ideological, religious, and/or, in the context of finance, economic reasons. Proponents of American exceptionalism often expect or advocate for the United States to occupy or play a leading role in global affairs.

DeepSeek is a Chinese artificial intelligence startup that in January 2025 became a leading free downloadable app in the United States. This followed DeepSeek’s announcement that its AI model performed as well as market-leading models and that it was developed at a significantly lower cost. This led to a selloff of well-known U.S. technology stocks on Jan. 27, 2025.

Fiscal policy refers to the tax collection and spending a government uses to influence its country’s economy.

Guidance refers to statements from the managers of publicly traded companies that indicate whether they expect to realize near-term profits or losses and why.

Hard data in economics refers to objective, quantifiable measurements of economic activity. Hard data is backward-looking and takes time and effort to collect and verify.

Large language models (LLMs) are artificial intelligence algorithms that can recognize, summarize, translate, predict, and generate text, as well as respond to questions in a conversational manner, by massively large sets of data. Large language models learn context and meaning by tracking relationships in sequential data, such as words in a sentence.

Secular stocks are characterized by having consistent earnings over the long term constant regardless of other trends in the market. Secular companies often have a primary business related to consumer staples most households consistently use whether the larger economy is good or bad.

Soft data reflects the results of surveys of consumers or other participants in the economy, as well as indices focused on sentiment and expectations. Soft data tends to be forward-looking, providing indications about the direction of existing trends.

Stagflation, first described after the oil shocks of the 1970s, is an economic condition that includes slow economic growth (or even declines in gross domestic product), relatively high unemployment, and inflation.

A zero-sum game is a set of circumstances where a gain for any one party results in a loss for another.

Indices

The MSCI ACWI (All Country World Index) ex USA Index captures large- and mid-cap representation across 22 of 23 developed markets countries (excluding the United States) and 24 emerging markets countries. With 2,228 constituents, the index covers approximately 85% of the global equity opportunity set outside the United States. Developed markets countries include Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the U.K. Emerging markets countries include Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Kuwait, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Saudi Arabia, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates.

The S&P 500 Index measures changes in stock market conditions based on the average performance of 500 widely held common stocks. It is a market-weighted index calculated on a total return basis with dividend reinvested. The S&P 500 represents approximately 80% of the investable U.S. equity market.

About ClariVest Asset Management

ClariVest Asset Management is built around a single core investment philosophy: Clarity in the investment process is critical to maintaining strong performance and client relationships. We believe that success is dependent upon several factors, the most important of which is a disciplined investment strategy with a talented, experienced team of people to execute it.

M-767783 Exp. 6/30/2026