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MARKET UPDATE
Tariffs, The Markets, and Your Portfolio
Over these last few weeks it has been nearly impossible to avoid headlines about tariffs and the economy. There are many groups who have felt the direct effects of these tariffs, with stock market investors being one of them.
Reacting to Market Volatility
When we experience volatile periods (which happens on an annual basis), it is not uncommon for investors to experience an emotional reaction. As we are in a news-heavy society, the sensationalism of the financial media stokes this emotional reaction to a greater degree. Depending on which media outlets we subscribe to, the headlines range from ‘you need to sell all of your stocks’ to ‘this is an incredible stock buying opportunity.’ These financial headlines are intended to get clicks, and typically written by pundits who aren’t working in the industry or with money on a daily basis. This challenge reinforces the belief that the stock market is an incredibly efficient long term investment vehicle, but unpredictable in the short term. Our role as advisors during these periods is to set the emotion aside and instead rely on proven processes.
Recent Market Performance
First off, how has the market faired of late? Looking at the S&P 500 Stock Index which tracks the 500 largest publicly traded companies in the US, we see that that as we write this article there has been a -8.6% pullback since the market high on February 19th. Pull backs like this are never enjoyable, however not uncommon as part of the stock market’s ultimate upwards trajectory. This dip has given back some of 2024’s gains, however the S&P 500 is still up +9.05% over the past 12 months.
Why Timing the Market Doesn’t Work
Predicting short term stock market movements like this is a fool’s endeavour, and one that should be avoided. A question that can arise during these times is 'should we sell our stocks now, then buy back in when this blows over'? Our direct answer is no. History tells us that as quick as markets can dip, the rebound often can be just as quick. Stock price movements are leading indicators and usually price in events before they happen. By the time news headlines are bullish about the stock market, typically the rebound has already happened. We have strong conviction that this volatility is not fundamentally based, but rather pressure due to political headlines. The tariffs are being used as tools for trade negotiations rather than long term policy implementation. Due to this we are not concerned long term. The continued sentiment is that we will see higher stock prices in the coming years.
Portfolio Positioning & Outlook
We cannot control what will happen in the markets in the short term, and we cannot predict how the tariffs will evolve. What we can control is how we position our clients’ portfolios to ensure positive long term outcomes. We have dealt with many of our clients for 10+ years now and we have consistently reinforced that your investment portfolios are a byproduct of your financial plans. We do not chase fads or market trends, but instead allocate our clients’ money to high quality, proven investments that focus on consistent cash flow. To support this, we believe in holding uncorrelated assets within a portfolio to provide stability in times such as these. The alternative investments we hold such as apartment rentals, storage locker facilities, farmland, and private lending are all positive on the year – and have not experienced volatility from these tariffs. Combining this with investing in high quality stocks with solid fundamentals has and will continue to provide strong long term results. Some of our clients check their portfolio daily, while others only at statement time. While each client portfolio is different (and results vary based on timing), we are seeing year to date returns in our core portfolios ranging between -2% to 0% so far in 2025. While we are pursuing positive growth annually, your portfolios are well positioned during periods of volatility such as this which sets us up for the next period of growth.
As 2025 plays out our continued role as advisors is to monitor the markets to ensure your portfolios are well positioned. If we believe there are reasons to make changes or opportunities available we will reach out to you directly. If you have any questions regarding the tariffs, the economy, your portfolio, or your financial plans – we are always available to book in a call to discuss further.
Sincerely,
The Ivory Planning Group Team
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