Dear Friends,
If you’ve been watching the stock market lately, you’ve probably felt a little uneasy. Stocks are up one day, down the next, and the headlines aren’t helping. I get it—market volatility can be unsettling. But before you make any knee-jerk decisions, let’s take a step back and look at the bigger picture.
What’s Causing the Market’s Jitters?
As we entered 2025, most economists expected some market turbulence. Slower economic growth, shifting policies, and inflation concerns were all on the radar. What caught many investors off guard, however, was how aggressively the Trump administration leaned into tariffs.
During his first term, we saw a pattern—new tariffs would be announced, the stock market would react negatively, and then the administration would pull back, offering some relief. This time around, that playbook seems to have changed. Now, businesses and investors are left guessing how far these policies will go, creating an environment of uncertainty.
And if there’s one thing markets dislike, it’s uncertainty. Companies are hesitant to invest, analysts are struggling to predict earnings, and consumer confidence is wobbly. The result? A stock market that looks more like a yo-yo than a steady climb.
What This Means for You
First, don’t panic. Volatility is nothing new. If you’ve been investing for any length of time, you’ve been here before – and you’ll likely be her again sometime in the future.
Historically, the stock market corrects (drops 10-19%) about once a year. That’s normal. And despite these temporary setbacks, the market has still averaged a 13% annualized return, including dividends, since 1980.
More importantly, trying to time the market—jumping in and out based on short-term swings—almost never works. In fact, studies show that investors who attempt to time the market end up underperforming by about 5% per year. Why? Because the best days in the stock market often come right after the worst ones.
Miss just the single best day of the year, and your annual return takes nearly a 4% hit. Miss the two best days, and that number jumps to nearly 7%. It’s a costly mistake that too many investors make.
Staying the Course
Market volatility is like turbulence on an airplane—it’s uncomfortable, but it doesn’t mean the plane is going down. And just like a pilot doesn’t change course every time the ride gets bumpy, you shouldn’t abandon a well-thought-out investment strategy just because the market is having a rough patch.
Yes, there are concerns about tariffs, inflation, and the pace of economic growth. But there are also strong tailwinds—artificial intelligence investments, resilient corporate earnings, and a labor market that’s still holding steady.
The key is to focus on your long-term plan. Are your investments appropriately allocated, or are they too risky? Adjustments and rebalancing? Sure, that’s smart. But drastic moves out of fear? That’s a recipe for missing out on long-term gains.
If you’re feeling uneasy about your portfolio, let’s talk. My job is to help you navigate these market cycles with confidence, not panic. Volatility is part of the journey, but with the right plan, your financial future doesn’t have to be.
As always, I’m here to help. Reach out if you have questions or just need some reassurance.
Sincerely,
Richard Sturm
Managing Partner / Wealth Manager