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Tariff Tantrum Boy, That Escalated Quickly – Ron Burgundy
How quickly things changed. Concerns over tariffs, inflation, a slowing economy, and even the s-word… stagflation have changed everyone’s mood. Sentiment dropped like a rock
So did PE Ratios (price you pay for earnings)
The first two and half months of the year have seen the tech-heavy Nasdaq down almost 10% and the S&P 500 down over 5%, both well off their all-time highs, if not in correction territory, close to it. After a calm 2024, volatility escalated quickly. Boy, that escalated quickly!
The market doesn’t care about valuations until it does. The stock market decides what it wants to see, not the media, not politicians, and not influencers — “it cannot be intimidated, threatened, canceled, furloughed, or bullied; it has no gender, ethnicity, or religion… it is the ultimate blind voting machine.” — an anonymous strategist at a large bank But the market is emotional. And it often shoots too far to the upside and downside, especially when there is uncertainty, like around tariffs. When valuations are high, it takes less of a push to knock them down
And a 10% drawdown is normal. Very normal. Roughly every year and a half or so. That kind of volatility is why risky assets return more than a savings account. Uncertain times like these are the price of admission. Corrections will happen; it is not a matter of if but when
The uncertainty is probably not going anywhere. What can you do? Take comfort in your plan and diversification.
How do you like them apples? 2025 has shown us why diversification is so critical. Value stocks are up almost 2%, while Growth stocks are down almost 9%. International and Emerging Markets were up over 8% and 4%, respectively. That is why we at Sona stay diversified! After a decade, value & international investors finally have their day(s). Diversification works.
Trust your plan The reason we plan is so that we cannot only manage through uncertain times but take advantage of them. If we knew the future, financial planning would not be a profession. Financial planning is about making informed decisions about possible outcomes with an uncertain future. Financial planning is a lot like raising kids. The little things now make a big difference years from now.
If you don’t have a plan and would like to get one, schedule a Discovery Meeting:
I know it is not easy during times like these. Even though we know that with enough time, this drama will pass. Everyone reacts differently; we are all human. I know my boys will eventually leave the nest; it doesn’t make the process any easier. Very little joy comes without a little pain. Try to have perspective and a little faith. To health and wealth! Mark Struthers, CFA, CFP®, CRC®, RMA® |
