Market Is Up — But Smart Investors Aren’t Letting Their Guard Down

The S&P 500 may be riding high this June, but let’s not be fooled by surface-level gains. With geopolitical tensions heating up and tariff fears back in the headlines, investors would be wise to look past the green numbers and ask: What’s really going on beneath the market’s rally?

According to Wells Fargo’s Sameer Samana, “We’re entering the greater-fool phase.” That’s not a phrase thrown around lightly, it’s a signal. It means we’ve hit a stage where some investors are buying simply because others are buying, hoping they can offload their positions at higher prices to the next optimist in line. That kind of behavior rarely ends well.

So, what’s fueling the tension behind the optimism?

1. Tariff Uncertainty Is Creeping Back

Earlier this year, the White House paused a set of reciprocal tariffs and postponed targeted levies on China. Those deadlines are now fast approaching, July and August, to be specific. If those tariffs are reinstated or escalated, it could lead to rising import costs, disrupted supply chains, and inflationary pressure. Investors are watching this closely, because trade tensions have a way of shaking even the most confident bull runs.

2. Middle East Tensions Just Escalated

Over the weekend, the U.S., in coordination with Israel, launched strikes on Iranian nuclear facilities. While initial reports call it a “spectacular military success,” the long-term market consequences remain unclear. A broadened conflict could spike oil prices, further fan inflation fears, and dampen global growth expectations. As one strategist put it, the “illusion of containment” in the region has now been shattered.

3. The Fed Is In a Tough Spot

The Federal Reserve recently chose to hold rates steady, citing solid economic activity and a still-low unemployment rate. But their internal forecasts paint a more cautionary picture: GDP is expected to slow to 1.4%, core inflation may rise to 3.1%, and unemployment could inch up to 4.5%.

Add to that the threat of tariffs and a possible oil price spike, and you have a classic stagflationary setup: slow growth plus persistent inflation. It’s a balancing act the Fed will have to manage carefully, and investors will be watching every move.

So, what does this mean for your portfolio?

Although the S&P 500 is only 2.9% below its all-time high, risk-adjusted returns are subpar. Goldman Sachs recently reported that the index’s return-to-risk ratio is just 0.1 for the year, far below the historical median of 1.0. That means we’re seeing high volatility without strong returns.

In short, investors are taking on more risk but not getting rewarded for it.

Now Is the Time to Reassess, Not React

It’s easy to feel confident when markets are rising. But real confidence comes from preparation, not momentum.

Ask yourself:

✅ Is your portfolio resilient in times of high volatility?

✅ Are you positioned to ride out uncertainty around global trade and geopolitics?

✅ Are you adjusting your financial plan for potential stagflation?

If your answers leave you unsure, you’re not alone. This is a smart time to revisit your portfolio. A rising market isn’t always a safe market. While June might close on a high note, the path ahead is far from clear. Tariff decisions, global conflict, and central bank responses will shape the second half of the year.

Disclaimer:‍‍‍‍‍‍ Investment carries certain risks. You should not just rely on results as an indication of your financial needs. You should understand and familiarise yourself with any investment and the associated risks before investing. You are also recommended to seek professional advice before making any decision to buy, sell or hold any investment or insurance product. The views and thoughts expressed in the post belong solely to us, and not to Manulife Financial Advisers Pte Ltd, or any other group of individuals.