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Market Uncertainty: Navigating Recent Turbulence
What's Happening
The markets are experiencing significant volatility as investors react to President Trump's sweeping tariff announcements. The U.S. stock market has lost more than $6 trillion ($6,000,000,000,000) in value in response to Liberation Day, with the S&P 500 flirting with bear market territory (20%+ decline) from its February high. The "Magnificent Seven" tech giants (Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta, and Tesla) have lost around $1.8 trillion in market value. World leaders and business titans alike are struggling to know what to do next.
A Moment for Perspective
As I mentioned in my contribution to the Charlotte Ledger last week, market volatility is nothing new. My career spans the Russian Debt Crisis, the Dot Com Bust, the Great Financial Crisis, the COVID crash of 2020 and others. I've seen this movie before. You have too. On average we get a new version every 5 to 7 years and it is always scary. The characters and plot may change, but the ending for disciplined investors remains predictable.
Warren Buffett famously said, "Be fearful when others are greedy and be greedy when others are fearful." Right now fear is in control. While headlines scream and markets drop, wise investors maintain their independence from the crowd's emotions.
Typically the U.S. stock exchange is open 5 days a week from 9:30 am to 4:00 pm. Any day the market is open you have the option to:
- Show up and buy something
- Show up and sell something
- Stay home and do nothing
Option number three is absolutely viable and oftentimes very wise. We find ourselves at a moment where we simply cannot know if the U.S. President is using tariffs to negotiate or to create long-term domestic manufacturing incentives. It’s normal to not know what will happen next.
Remember too that as noted in January's newsletter, market timing is incredibly difficult—missing just the 10 strongest days over the past 20 years would have reduced returns from 10.4% to 6.1%. Many of the strongest days often follow closely behind the worst days.
What This Means For You
If you're 20+ years from retirement: Market downturns like this can be your ally. Each contribution you make now buys more shares at lower prices. Consider this sale an opportunity rather than a threat. This could be the time to consider increasing your contributions if your cash flow allows.
If you're 10- 15 years from retirement: You still have time on your side. Stay disciplined with your contributions and resist the urge to make dramatic changes based on short-term events.
If you're approaching retirement in the next few years: We've already positioned your portfolio with this kind of volatility in mind. The income-producing portions of your portfolio and your near-term cash needs have protection from these market swings. This is precisely why we build retirement plans with multiple layers of security. And don’t forget. You still need stock exposure to help you outpace inflation down the road.
If you're already retired: Your withdrawal strategy was designed for moments exactly like this. Your income plan doesn't depend on selling positions during downturns. Take comfort in knowing your essential expenses are covered by more stable income sources, giving the growth portion of your portfolio time to recover.
Smart Money Moves During Volatility
Times like these present a perfect opportunity to check on a few financial fundamentals:
Check your emergency fund: Is it still sufficient to cover 3-6 months of expenses? If it's been depleted, consider prioritizing its replenishment once markets stabilize.
Look for budget bloat: Now's an ideal time to trim unnecessary subscriptions. Maybe you've finished "Severance" and can pause Apple TV+ until season 3 (or Ted Lasso returns). Small cuts add up and can be redirected to your investment strategy.
Review your automatic contributions: If you're still working and your emergency fund is solid, consider maintaining or even increasing your regular investments to take advantage of lower prices.
A Final Thought
Having weathered multiple market storms over my career, I've learned that these moments of market panic often represent the best long-term buying opportunities. While it's never comfortable to watch portfolio values decline, history has consistently rewarded those who stay the course.
If today's market movements have you concerned, or if your personal circumstances have changed, I'm here to talk. Sometimes a 15-minute conversation can provide the perspective needed to stay on course. There is also real power in turning off the television (or setting down your phone) and going outside. Take a walk.
As always, thank you for the privilege of serving as your financial guide.
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