Friends,
Through March 31st we were in the midst of a mild, much anticipated, selloff in the U.S. stock market. After two consecutive years of outstanding stock market returns, we were anticipating and planning for some kind of correction in 2025. Through March, the domestic stock market was down about 5%. Fortunately for us and our clients, our portfolios are very well diversified and the decline in U.S. stocks was somewhat offset by our positions in foreign stocks and the bond market (both of which generated positive returns in the first quarter).
On April 2nd, the Trump administration announced a broad range of import tariffs on virtually all U.S. trading partners, friend and foe alike. Right or wrong, this new policy marks a significant departure from the previous, long-standing trade policy. The administration has framed this shift as a means to reduce the U.S. trade deficit, boost American manufacturing and reduce our reliance on foreign made goods.
Markets reacted swiftly and negatively with U.S. stocks declining 9% for the week ending April 4th. While the administration’s long-term goal is to strengthen the U.S. economy, the speed and style of the rollout has created significant uncertainty and has raised the risk that a trade war could lead to higher consumer prices and slower economic growth, at least in the short term.
What’s an investor to do?
- Rule #1; don’t panic. Avoid making big financial moves, especially in your portfolio.
- Stay the course with regards to a disciplined investment strategy of asset allocation and rebalancing to targets. This may include adding modestly to those positions which have sold off the most.
- Keep in mind or review your long-term financial plan and consult with us as needed. It’s unlikely that this episode will ultimately result in a material change to your long-term plans.
We understand the anxiety that comes with seeing your investment values decline on paper. We are closely monitoring these policy developments and assessing the implications for your portfolio. As difficult as market downturns can be, they also present opportunities. History has proven that “time in the market vs. timing the market” remains the most reliable path to creating long term wealth.
Do not hesitate to reach out to us if you are concerned or want to talk at any time. We appreciate you and your support and encouragement.
Matt and Andrew