U.S. stock markets cratered Monday, and yesterday wasn't much better. Investors increasingly fear that the economy could be headed into a recession, and "Tariffs" is the current buzzword spooking consumer confidence. The chart below shows Trump 1.0 vs Trump 2.0. as it relates to market reactions. Similar reactions can be seen. 

Let's put this into perspective to alleviate fears. The S&P 500 has been down 5% year-to-date. But, in the last two years, the S&P 500 gained 26% and 25%, respectively. We knew some correction was forthcoming; we couldn't keep going up and up, and we needed some kind of catalyst to start the correction. Having 5% and 10% corrections in any given year is perfectly normal. On average, we have four to five each year. The chart below shows pullbacks and where the market ended the year. We had 10% and 8% pullbacks in the last two years. 

 

Four out of the eleven sectors are down, and the two driving the markets are tech and communication services. Going into 2025, these two sectors accounted for 40% of the market weight. In addition, there are sectors of the market that are up: large value, International, and Real Estate. Bonds have flipped and are now also up—3% year to date. 

An interesting study was recently highlighted going back to 2010. If you invested in the S&P 500 every time CNBC ran their "Markets in Turmoil" special, you would have had a positive return 100% of the time one year later.

In other words, the best time to invest is often when the sentiment is at its worst. Think about this in your personal life: for everything we purchase, we look for a sale or negotiate to get a better price. Why is it that when the market goes down, we want to return our purchase? Then, we want to re-purchase that item when it goes back up or is in market stabilization. 

The first question to ask before you consider any changes is, "What is your time-horizon (time-horizon is your time on this earth)"? It is usually long-term, or you're investing for your kids/grandkids, family, or charity. We have all heard the phrase "this time is different," but history has shown that "this time is different" isn't different; we return to the law of averages. Things are different in many ways, but investing in companies hasn't changed. We get our information from the web vs. a newspaper; we communicate through email vs. a letter sent through the mail. We have almost everything we need on our cell phones: passports, passcodes, navigation, and the ability to book travel, pay for products and services, share and take pictures, and watch our favorite TV shows. 

The bottom line is, is staying the course doing something? Actually, doing nothing is making the choice of doing something. Let's not let headlines dictate what we're doing that may harm the portfolio's long-term growth. A diversified portfolio will help with volatility but can't always mitigate losses. We can't time the highs, lows, or shifts throughout the year. You're not alone; there is a tremendous amount of motion on the political front, regardless of your political views. It's great to have a partner; we know your personal situation and can decipher most of the information between the lines. The information age can and will give you a tug-of-war between fear and greed. Don't let your emotions get in the way of a sound investment plan. 

Have questions about how these insights and ideas could impact your personalized wealth management strategy? Let’s talk.

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