“In investing, what is comfortable is rarely profitable.”
— Robert Arnott
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A special note to Grey Swan subscribers: This week’s Grey Swan Live! will be held on Friday at 11 a.m., not tomorrow. We’re in the middle of some new groundbreaking research – and will have even more details that afternoon. But our paid-up Fraternity members will get an early sneak peek at what we see developing. Sneak Peek Grey Swan Live! We set up a “VIP access” hot list for non-paying members of the Grey Swan Investment Fraternity. To be reminded before Friday’s event, click on this link and add your name and e-mail to the list. |
August 14, 2025 — Tariffs are back. Consumers are struggling. August is historically the worst month for stocks.
You’ve probably seen versions of these headlines recently. The articles appear designed to grab your attention by sounding the alarm, then close with a hand-wringing quote from someone who probably missed the last bull run.
But here’s a rule I live by: Follow the trend lines, not the headlines.
Because if you look past the fear mongering and focus on the data, you’ll find that the market is humming with strength, and investors should take note.
Buybacks Are Booming
Let’s start with stock buybacks. Companies don’t spend money repurchasing shares unless they believe their stock is undervalued or, at the very least, a better use of capital than sitting in the bank.
In July alone, U.S. companies announced a record $166 billion in stock buybacks. That’s the biggest amount recorded in July, more than double the previous record set in 2006.
Announced buybacks saw the highest dollar volume for July
U.S. Global Investors
Year-to-date, buyback announcements total nearly $926 billion, putting us well ahead of the previous record pace. Who’s leading the charge? Financial and tech giants, flush with cash and optimistic that the market will reward them long-term.
Now, some might point out that buybacks peaked earlier this year. That’s true. They’ve come down slightly from Q1 highs, but they’re still running at a historically high level, and that’s what matters.
The IPO Market Is Back
Next, let’s talk about initial public offerings. After a few quiet years, the IPO engine looks to be roaring again, a good sign of investor demand.
As of this week, we’ve seen 204 IPOs so far in 2025, up more than 80% from this point last year. Even better, the quality of IPOs is improving. Unlike the SPAC frenzy from 2021, today’s IPOs are rooted in growth and profitability.
U.S. IPO activity rebounded in Q2 2025
U.S. Global Investors
The second quarter alone saw $15 billion raised across 59 IPOs, a 34% increase from Q1. With global IPO activity being more mixed, the U.S. is clearly leading the pack.
If markets were truly on the verge of collapse, would we be seeing this kind of investor appetite for new equities? Would billion-dollar startups be going public?
Again, the trend line speaks volumes. Don’t let the media tell you otherwise.
The Smart Money Is Still Investing — in ETFs
Meanwhile, retail and institutional investors alike are pouring money into ETFs. U.S. ETF assets came close to hitting $12 trillion last month, with $116 billion in inflows alone.
Active ETFs brought in a record $44.8 billion in July, the highest ever recorded. That tells me that more investors are looking for targeted, actively managed exposure to key themes, whether that’s defense, gold, energy or AI.
In fact, active ETFs now make up nearly 10% of the entire ETF market, up from less than 1% just 15 years ago, according to Morningstar.
Strong Earnings, Even Stronger Trends
Want more proof that the market isn’t buying into the doom-and-gloom narrative? Take a look at corporate earnings.
Around two-thirds of S&P 500 companies have reported Q2 earnings, and of those, more than 80% have beaten earnings expectations. That’s not just above the five-year average—it’s the highest beat rate since 2021. In the AI-fueled tech sector, over 90% of companies have posted better-than-expected results.
As for the third quarter, FactSet analysts raised their earnings per share (EPS) estimates, despite the persistent macro headwinds.
Tariffs Are a Drag, But Let’s See How They Play Out
Speaking of headwinds: Tariffs are back, and they’re not insignificant.
The average effective U.S. tariff rate has hit 18.3%, the highest level since the Great Depression. It’s already impacting prices, with economists estimating a 1.8% increase in consumer prices and a potential $2,400 annual hit to the average household, according to Yale’s Budget Lab.
But here’s the thing: Markets have a way of adjusting. Companies shift supply chains. Consumers find substitutes. Tariffs are friction, but I don’t think they have to be fatal.
In fact, some sectors could benefit from reshoring and industrial reinvestment. And let’s not forget that these tariffs were telegraphed well in advance, and markets had time to front-run the changes.
I’m not dismissing the risk. I’m reminding you to watch how markets react, not just how journalists report.
Seasonal Volatility Is Just That—Seasonal
Yes, August and September are historically choppy months for stocks. Average returns tend to be weaker, and lower liquidity during the summer means volatility can spike on any bad headline.
August and September have historically been the weakest months for stocks
U.S. Global Investors
The question every long-term investor should ask is: Even if you knew the market would drop 10% next month, would you sell today?
Probably not. Because you’d risk missing the recovery, and you’d likely pay taxes to boot.
Keep in mind that the S&P 500 rose 26% in 2023, and another 25% in 2024. It’s up between 8% and 9% so far in 2025. That’s what long-term compounding looks like.
Trying to avoid every dip and pullback is a fool’s errand. Staying invested—and staying disciplined—beats timing the market almost every time.
Block Out the Noise
It’s easy to feel overwhelmed by negative headlines. That’s their job—to get clicks and sell ads.
As investors, our job is to look at the data, not the drama.
So here’s what the data is saying:
- Corporations are confident—just look at buybacks.
- Capital markets are thriving—just look at IPOs.
- Investors are engaged—just look at ETF flows.
- Companies are executing—just look at earnings.
Yes, there are risks. There always are. But the underlying trends, as I see them, show resilience and strength.
So ignore the headlines. Follow the trend lines.
Frank Holmes
Forbes & Grey Swan Investment Fraternity
Continued Below…
P.S. from Addison: Frank Holmes is an honorary member of the Grey Swan Investment Fraternity and has energized Grey Swan Live! as our guest.
We see corporate buybacks as serving another purpose: allowing companies to use their cash, and take on debt in dollars. If the dollar continues to lose its value, it’s a smart move – and one that can move a share price higher.
But it’s another facet of what we think of as a “most terrifying bull” market. Because it won’t be based on company fundamentals – but rather on skepticism over the health of the dollar.
Meanwhile, if you haven’t made a note, please do. This week’s Grey Swan Live! will air Friday, August 15, at 11 a.m. ET – less than 24 hours from now.
We’re in the thick of some groundbreaking research and pulling together VIP access for select folks outside the Grey Swan orbit. But paid-up Fraternity members get the early look Friday morning.
It’s a fitting date. Tomorrow marks 54 years since Nixon took the U.S. off the gold standard, dismantling the Bretton Woods exchange rate system.
That single move flipped the global monetary order from gold-backed stability to one backed only by the “full faith and credit” of the U.S. government — and put more political heat than ever on the Federal Reserve’s “dual mandate” to tame inflation and maintain full employment.
Back in 1971, markets initially cheered Nixon’s decision — the Dow popped nearly 4% the next day. But the party didn’t last. Within a decade, inflation was running into the double digits, gold had rocketed 15-fold, and the Fed was forced into the brutal rate hikes of the Volcker era to restore credibility.
That same dual mandate is why Jerome Powell is squarely in Trump’s sights today. We have reason to believe the outlines of a new Fed regime are already forming… and we’ll be unpacking the details live.
The CPI inflation data from the BLS is suspect. Trump has threatened to sue Powell over the cost overrides of the Eccles Building, the Fed’s D.C. headquarters. According to Treasury Secretary Scott Bessent, yesterday, the list of names in line to replace Powell has grown to ten. The drama surrounding next week’s Jackson Hole meeting of the world’s central bankers couldn’t be more intense.
We’re going to unpack it all… and give a free trade to Grey Swan Live! Attendees.
Mark your calendar:
Sneak Peek Grey Swan Live!
Friday, August 15, 2025
11am ET
We set up a “VIP access” hot list for non-paying members of the Grey Swan Investment Fraternity. To be reminded before tomorrow’s event, click on this link and add your name and e-mail to the list.
(Clicking the registration link above will instantly register you for urgent reminders and details leading up to the event on Friday, August 15th at 1pm ET. You may unsubscribe anytime.)
Your thoughts? Please send them here: addison@greyswanfraternity.com
