04/10/2025
Investors have had a lot to digest this year. 2025 began with markets moving higher, continuing a two-year run with 20%+ annual gains. The markets continued to be led by large tech stocks. There were hopes the economy would remain strong, and inflation would continue to fall, enabling the Fed to resume cutting interest rates.
In February, things changed. The new administration in Washington announced significant policy changes. Executive orders were signed, leading to government layoffs. Trade policy would feature significant tariffs, potentially setting off an escalating global tariff fight with our trading partners.
On April 2nd, at a ceremony at the White House, the tariffs were officially announced. They were far larger and broader than expected. The market reaction was swift. Given the potential disruption to trade, investors quickly reexamined their assumptions about earnings, employment, and interest rates. Stocks retreated as investors ran for the exits.
Our perspective
First, we recognize that disruptive events are unsettling. The capital that our clients have entrusted to us is often the result of years of effort and considerable sacrifice. Seeing these funds, even temporarily eroded, is disappointing. We take this seriously. We don’t just stand aside and hope for the best. There are things we can do and, in fact, already have done to help.
One is diversification. We typically build portfolios with a mix of asset classes designed to limit the risk involved with highly concentrated portfolios. Over the past few years, bonds and international stocks have trailed the returns of the crowded Big Tech trade. That could lead some to think, “Why do I own these anyway?” The answer is… times like these. While the Nasdaq, a proxy for large cap tech stocks, is down significantly, the MSCI International Index has fared much better. Bonds, as measured by the Bloomberg Aggregate, are also posting positive returns for the year. Keep in mind that this situation is developing, and markets remain fluid and subject to change.
Another important tool is knowledge of market history. We know that while investing has been rewarding over time, it is also volatile and uncertain. In serving our clients over the years, we have been through times like these, and likely, worse. The “Great Recession” of 2008-2009, the brief but powerful COVID decline of 2020 and the 2022 decline are just a few. Together with our clients, employing discipline and restraint, we made it through all of them.
Lastly, open lines of communication can help. We are here to talk through current events, your portfolio, your concerns, and just listen, if needed. We aren’t Robo advisors. We are real people here when you need us.
Tim Anselmi & Nathan Harrison
Sources: CNBC, S&P Global, Wall Street Journal, Dow Jones Market Data, The Economist, Federal Reserve Bank, Bloomberg Indices, MSCI, Reuters News Service
