Market Commentary & Advice

We are now in our 3rd market trading day since the Trump administration announced their new tariff strategy last Wednesday afternoon.  Because of the short-term economic uncertainty that these policies have created, equity markets have sold off since Thursday and U.S. equities have now entered correction territory (-10% or greater) for the year.

We know that investor anxiety is extremely high for some of you.  Rapid market sell-offs are scary in the moment and they can create real emotions of fear of loss.  However, your reactions in the midst of this market volatility will have a significant impact on your current and future wealth.

Our Fiduciary Investment Advice to Our Clients Today

While your gut may be screaming for you to “do something” today, history teaches us that the best thing you can do in the midst of market volatility is to stick with your long-term investment plan.  

5 Important Things We want You to Consider this Week

1. Market declines of -10% to over -20% are common and they frequently occur during the trading year.  However, as the chart below visually shows, intra-year declines rarely indicate how the year will finish.  In 2020, markets plummeted -30% on pandemic news, but they finished the year with positive double digit returns.

2. The expected future return for equities (stocks) is always positive at any point.  As the chart below shows, stock market gains after sell offs in the market can be significant.

3. Global diversification is a huge advantage during periods of market volatility.  You may be surprised that International and Real Estate stocks are barely negative YTD.  Bonds are still positive.  DecisionPoint constructs its investment portfolios for this very moment.  

4. Nearly all of you are still contributing every pay period into your retirement accounts.  You are buyers every time those deposits hit your account.  Buying equities this month is a huge advantage to you because you are purchasing those equities at a substantial discount.  If you panic and change your allocation to bonds or bank savings, you will then be buying cash and bonds at the precise time it is an advantage to you to be buying equities.

5. As hard as it can be to do, time is the ONLY consideration that should drive your investment decisions right now.  If you are 5-7 years away from retirement, or from taking distributions from your retirement accounts, you should only hold equities in your retirement accounts.  If you are nearing retirement, your bond allocation of 20-40% is your insurance policy that you never have to worry what the stock market does in the short term.

What DecisionPoint is Doing to take Advantage of this Moment

With market volatility there are always investment opportunities.  Today we are initiating the rebalancing of our DecisionPoint investment portfolios.  Rebalancing follows the principle of buying low and selling high.  Some asset classes, like U.S. Small Value, are down nearly -18% YTD, while other asset classes are down only -2% to -4%.  Rebalancing will allow us to purchase more of what has been hardest hit over the last three trading days.

CJ, Matt, Chadd, Clawson, Jacob, and Ryne are standing by and ready to help you make wise investment decisions this week.  Please don’t hesitate to contact us.

As always, please reach out if we can be of assistance.

- Your DecisionPoint Financial Planning Team -