By Avi Salzman

Investing in U.S. stocks today can feel like owning a mildly profitable store that floods every couple of weeks -- the bills get paid, but the owner has dark rings under his eyes.

The S&P 500, which was flat for the week after a slight loss the week before, is that mildly profitable business. The index has risen just about 1.5% this year, and investors who hung tough through the ups and downs -- particularly the selloff around Liberation Day on April 2 -- have been mildly rewarded.

But the headaches have been massive, too. From tariffs to war in the Middle East and inflation, the market's biggest anxieties are far from resolved, even if underlying corporate earnings have been strong.

How frustrating has this year been? On a risk-adjusted basis -- that is, by measuring stock gains against volatility -- owning stocks has been beyond irksome. Goldman Sachs calculates that returns for the S&P 500 this year have been in the 24th percentile since 1990, while volatility has been in the 89th percentile. The news has been even worse for the S&P MidCap 400 and small-cap Russell 2000 indexes, whose returns are underwater both before and after adjusting for volatility.

The largest worry for investors today is the prospect of war between the U.S. and Iran. President Donald Trump has threatened to attack if Iran doesn't agree to scrap its nuclear weapons program. Stocks wobbled on the news, but recovered after Trump gave Iran a two-week window to comply.

Complicating the effort is the fact that there are three parties in this conflict -- Israel, the U.S., and Iran. Israel will be skeptical of any deal that Iran makes with the U.S., says Sarah Bianchi, chief strategist of international political affairs and public policy at Evercore ISI, and even a successful attack on Iran's underground nuclear site may not satisfy it, because the nuclear program could start up again.

"The path to a durable diplomatic solution remains extremely difficult," Bianchi wrote. "So ultimately neither a 'deal' nor a strike would provide a definitive and permanent end to this crisis, which is why Israel is likely to remain tempted to pursue regime change."

The other big question facing investors is whether the Federal Reserve will make multiple interest rate cuts this year, as Trump wants. Chair Jerome Powell didn't offer much guidance at a press conference this past week, saying, "Right now it's just a forecast in a very foggy time."

Goldman has some stock ideas to get investors through this very foggy time. It added several names to a basket of stocks that should perform well on a risk-adjusted basis. On average, those stocks are likely to experience slightly more volatility than the typical stock in the S&P 500, but are expected to rise more than twice as much over the next 12 months, some 29% to 11%. Among the names the bank added are Salesforce, home builder Lennar, and T-Mobile US.

If investors have to deal with the headaches, they might as well get some rewards out of it, too.

Write to Avi Salzman at avi.salzman@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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June 20, 2025 17:09 ET (21:09 GMT)

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